Financial Services

The Senate Economics References Committee has released 'Bitter Harvest', a comprehensive report on agribusiness managed investment schemes (Agribusiness Schemes). The report has been prepared in response to the recent collapse of a number of major Agribusiness Schemes and is primarily concerned with the significant and widespread financial losses incurred by the retail investors of those schemes.

As European banks pull back their global operations, Chinese banks eyeing higher yields are looking to establish a more dominant presence in the institutional banking market in Australia. These changing dynamics will lead to a significant change in the shape of the market, and we predict more M&A activity as a result in 2016/17.

This article examines the key aspects of the Corporations Amendment(Crowd-sourced Funding) Bill 2015, which is a central plank of the government's innovation package announced late last year, and outlines the likely steps towards the establishment of a crowdsourced funding market in Australia.

Broker handling fees are a well established tool that takeover bidders sometimes use to encourage acceptances and achieve all important acceptance momentum. However, recent 'future of financial advice' reforms have significantly curtailed their use. While there is still scope for these fees to continue to be used by bidders and received by brokers, understanding the permissible boundaries is critical.

The trend towards divestment of stand-alone derivative portfolios, primarily as a result of increasing capital charges being required for some derivative positions, has opened up an opportunity for non-prudentially regulated entities – such as managed funds – to invest directly in this asset class.

There is momentum behind the recognition of financial risks and opportunities associated with climate change and environmental, social and governance (ESG) factors in over the horizon investment decisions. This is driven not only by ethical shareholder groups but increasingly on the international scene by leading institutions who are proactively engaging with the associated valuation, risk management and disclosure issues. These changes shape debate around the investment of client funds in Australia (where there is no member-direction) and could be the tipping point that mainstream trustees and portfolio managers would be ill-advised to ignore.

A recent case filing in the US illustrates the importance of fund trustees and their directors remaining informed, proactive and engaged on the issues that may materially impact on portfolio risk management and strategy.

Recent amendments to extend the profits tax exemption for offshore funds to private equity funds is a proactive move by the Hong Kong Government to encourage private equity fund managers to set up new, and expand existing, businesses in Hong Kong.

Private equity managers can now perform more asset management activities in Hong Kong without the risk of their offshore private equity funds incurring a Hong Kong profits tax liability, although they still need to keep in mind the licensing implications of increasing management activity conducted in Hong Kong.

The rules have been released that govern the new Significant Investor Visa (SIV) regime and introduce the Premium Investor Visa (PIV) regime. The new rules came into effect on 1 July 2015.

Austrade and the Department of Immigration and Border Protection (DIBP) have announced the new framework for complying investments for significant investor visa (SIV) and premium investor visa (PIV) applications to take effect on 1 July 2015.

China's State Council has issued plans for three new Pilot Free Trade Zones in Guangdong, Tianjin and Fujian, and the expansion of its Shanghai Pilot Free Trade Zone. It also updated its foreign investment negative list and announced trial procedures for national security review of foreign investment in all free trade zones.  The expansion of China’s free trade zone program is set to advance the country’s financial reform journey and improve its ability to compete with more established rivals in the Asia-Pacific region.

The ASX has amended its Operating Rules to enhance disclosure requirements and facilitate the expansion of non-conventional exchange traded funds (ETFs), such as synthetic products and foreign collective investments, on ASX AQUA. Current and prospective issuers of ETFs and Managed Funds on ASX AQUA need to understand the new requirements and ensure compliance with them.

The final tranche of the Investment Manager Regime (IMR) concessions have at last been released for comment. These rules have been greatly anticipated and will provide much needed certainty for foreign funds and their investors once implemented.

The Australian Government has released a draft of the internationally negotiated rules and operational arrangements for the Asia Region Funds Passport for public consultation. 

Recent publicity surrounding the exclusion or divestiture of stocks in carbon-intensive industries shows that leading investors are reviewing the financial risks (and opportunities) associated with climate change. However, with debate on climate change often pitched around ideological poles, many superannuation fund trustees are struggling to translate these developments into prudent governance practice, consistent with their statutory and general law duties. This article looks beyond the political debate to consider what recent developments on climate change mean for the legal obligations of fund trustees, and the implications for boardroom practice. In doing so, they note that focus on the outcomes of investment (or divestment) decisions may have obscured the key legal issue – that of diligent process.

The Final Report of the Financial System Inquiry chaired by Mr David Murray was released on 7 December 2014. Here, we discuss key points arising from the Report and Mr Murray's speech to CEDA.

The People's Bank of China has released the Administrative Measures for the Foreign Exchange Purchase and Sale Business Provided by Banks which will come into force on 1 August 2014. The Measures will clarify the definition of Business and adjust the supervision and management model to provide banks with greater autonomy and a simplified process to market entry and exit.

A new derivative reporting regime will commence in Australia 2015. It will apply to Australian entities that hold an AFSL, and exempt foreign licensees (being offshore regulated parties that have the benefit of an exemption from the requirement to hold an AFSL), that have entered into OTC derivatives.

As the Government's final EOFY gift, the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014 was made on 26 June and registered today. The amendments commence on 1 July 2014.

The Senate Economics References Committee yesterday released its report on the Performance of ASIC. The Committee makes 61 recommendations. It is however important to recognise that they are not supported by all members of the Committee.

The Senate Economics Legislation Committee tabled its report on the FOFA amendment bill yesterday evening. While the majority of the Committee broadly supported the passing the bill, both the Labor Party and the Greens (who make up the majority of the current Senate) oppose the bill and recommend that it be rejected without amendment.

Earlier this month, the Treasury of the Australian Government released a consultation paper on 'Providing Certainty for Contractual Loss Absorption Provisions in Regulatory Capital', seeking feedback on the need for legislative amendments to facilitate the effective operation of new prudential requirements on the loss absorbency of regulatory capital.

The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2014 (No.3) (Cth) came into force on 1 June 2014, requiring reporting entities to make changes to their AML/CTF programs and customer due diligence procedures. The new rules follow extensive consultation by the Australian Transaction Reports and Analysis Centre.

The Australian government has launched an inquiry into the financial system, chaired by former Commonwealth Bank CEO David Murray AO. Partner Richard Batten and associate Tim Sutton track the developments to date and discuss the key themes and issues which have been raised.

Minter Ellison supports regular reviews of Australia’s financial system. The Wallis inquiry, the Henry review, and the Johnson report each provided the context for discussion and constructive change aimed at reshaping the financial services sector for the benefit of Australians while factoring in the interests of the global investment community. We therefore welcome the Financial System Inquiry (FSI) and the opportunity to offer detailed insights and recommendations to the Inquiry via this written submission.

On 3 April 2014, the Full Federal Court issued its judgment in Commissioner of Taxation v Resource Capital Fund III LP overturning the Federal Court's judgment. This case is significant because the main issue it considers relates to the treatment of a partnership that is tax transparent in one jurisdiction and taxable in another, and the application of a double tax treaty.

The Tax Agent Services Act 2009 (TASA) has been amended, heralding significant changes to the way financial planners are regulated. Financial planners will need to understand the boundaries between providing purely financial product advice and a tax (financial) advice service, and to determine whether they need to register with the Tax Practitioners Board (TPB) as Registered (Tax) Financial Advisers from 1 July 2014.

The Corporations and Markets Advisory Committee (CAMAC) has released a broad discussion paper to review the establishment and management of schemes, which opens up all aspects of the legislative structure. This is a continuation of the review which produced the CAMAC July 2012 Report, and may provide a useful indication of the issues that the Financial System Inquiry will consider in relation to managed investment schemes.

In this article, senior associate Leigh Schulz examines the recent trend towards structural subordination arrangements in deals involving senior and mezzanine finance. The article focuses in particular on the impact of structural subordination on a corporate group that has entered into an ASIC deed of cross guarantee.

The Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 was tabled in Parliament on 19 March 2014. The FOFA amendment regulations have not however been released at this stage, although we understand they are imminent.

Details of the federal government's proposed amendments to the Future of Financial Advice (FOFA) regime have come to light with the release of a consultation draft of Bill and Regulations that give effect to the reforms announced on 20 December 2013.

The Office of Best Practice Regulation has released the Regulation Impact Statement on the Government's proposals to amend FOFA prepared by Treasury in November 2013 (RIS).

ASIC issued Class Order [CO 13/1621] on 7 January 2014 to exempt responsible entities (REs) from the application form requirements of section 1016A.

The Coalition Government has announced that it will make good on its election promises to fix some of the problems of FOFA and more.

The Australian Transaction Reports and Analysis Centre and the Commonwealth Attorney-General's Department, has released an Issues Paper as part of the 'seven-year post-implementation review' of Australia's Anti-Money Laundering and Counter-Terrorism Financing legislative and regulatory regime. Stakeholders are invited to provide input into the overall operation of the AML/CTF Act and to identify areas of deficiency or possible enhancement.

The federal government today released a discussion paper seeking feedback on measures to improve super fund governance, finish outstanding Stronger Super transparency measures and enhance competition in the default super market.

On 27 November 2013 ASIC released its updated Information Sheet 155: Complying with requirements for superannuation products and simple managed investment schemes (INFO 155) The updated INFO 155 follows an ASIC industry review of shorter PDSs issued since the commencement of the shorter PDS regime in June 2012 and provides some useful comments as to how ASIC interprets and intends to regulate some of the more technical requirements and lodgement protocols of this regime.

The government has released the draft Terms of Reference for the Financial System Inquiry and announced that it will be headed by David Murray, former CEO of the Commonwealth Bank. The Inquiry has one year to deal with a very large agenda covering all aspects of the Australian financial system.

While the majority of the Stronger Super reforms have now commenced, a number of changes are due to come into effect at the end of 2013. With this date now rapidly approaching, we wanted to provide you with the tools for a Stronger Super 'health check' to make ensure sure you are prepared to start the new year in strong form.

A recent decision of the Supreme Court of Western Australia reinforces the need for parties to clearly state what they mean when seeking to exclude liability for 'consequential loss'.

Partner Michael Wallin and Special Counsel David Moore have contributed the Australian chapter in the first edition of the Foreign Investment Regulation Review.

In this article, partners Chris Brown and Richard Batten discuss the FOFA grandfathering regulation from a regulatory and transactional standpoint, arguing that despite shortcomings in the regulation, new rules which provide limited grandfathering for commission arrangements benefitting financial planners are nevertheless workable. Albeit with a little more care and attention.

The Australian Securities and Investments Commission (ASIC) has released class order relief for AQUA market exchange traded funds (ETFs) as proposed and described in its consultation paper (CP196) released in December 2012.

The new 'hedge fund' definition as set out in ASIC's Class Order 12/749 (as amended from 3 October 2013) is set out below together with some comments in relation to the changes.

In a move that will be welcomed by the managed funds industry, the Australian Securities and Investments Commission (ASIC) has narrowed the definition of 'hedge fund' in Class Order 12/749 with effect from 3 October 2013. ASIC has also amended and re-issued Regulatory Guide 240 – Hedge Funds: Improving Disclosure (RG 240) to reflect the changed definition.

With the campaign dust now settling, the business community is on standby for a raft of policy changes and refinements raised in the lead-up to poling day. In a series of articles Minter Ellison partners distinguish hard policy from the promises in industrial relations, and consider how the new government might tackle the proposed amendments to FOFA legislation and reframe Australia's climate change policy.

One of the most anticipated outcomes of the change of government, by the financial advice sector, is the promise to amend the Future of Financial Advice (FOFA) legislation. Fixing FOFA will involve the Coalition government making good on the 16 recommendations it made, while in opposition, as part of the Parliamentary Joint Committee on Corporations and Financial Services Report on FOFA in February 2012. We identify which of the proposed changes can be made by regulation and those that will require a Bill.

Earlier this week the Corporations and Markets Advisory Committee released a discussion paper, Crowd Sourced Equity Funding.

The government has released a discussion paper concerning the employee share scheme administrative and tax arrangements for start-up companies. This is the first major tax policy announcement for the ESS since the 2009 reforms and reflects the government's commitment to growing a robust start-up sector through a review of the regulatory regime.

On 19 July 2013 the Organisation for Economic Cooperation and Development released its much anticipated Action Plan on Base Erosion and Profit Shifting. The BEPS Action Plan sets out the actions required to counteract the methods of base erosion and profit shifting used by multinational companies, initially identified in its February 2013 report Addressing Base Erosion and Profit Shifting.

The Australian Taxation Office has issued its annual compliance program, 'Compliance in focus 2013-14', setting out the areas it will focus on in its investigations and reviews throughout the coming year. The compliance program can help you determine the likelihood of being subject to scrutiny by the Australian Taxation Office.

In a recent decision concerning the collapsed Great Southern Group, the New South Wales Court of Appeal has provided further guidance in relation to the operation of section 6 of the Law Reform (Miscellaneous Provisions) Act 1946. While the court's decision is useful for insurers and lawyers, section 6 remains problematic and ripe for change.

The Australian Government has announced significant changes to Australia's thin capitalisation rules which will affect both inbound and outbound investment. Significant changes are also proposed to deny interest deductions for some outbound investment. These changes will significantly impact multinational entities in the banking, private equity, resources and infrastructure sectors, leaving them with little time to prepare.

On 27 June 2013, Justice Brereton of the Supreme Court of New South Wales handed down his decision in the matter of Maiden Civil (P&E) Pty Ltd; Richard Albarran and Blair Alexander Pleash as receivers and managers of Maiden Civil (P&E) Pty Ltd & Ors v Queensland Excavation Services Pty Ltd & Ors. This is the first Australian case to give substantial consideration to the priority of competing security interests under the Personal Property Securities Act 2009. The decision is a seminal one for insolvency practitioners and financiers, clarifying key provisions and rules under the PPSA.

Despite the recent political chaos and leadership crisis, the Australian Parliament has passed significant reforms to Australia's GAAR (Part IVA of the Income Tax Assessment Act 1936) on 25 June 2013 - Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013. We consider the GAAR amendments will have a material impact on how boards and their risk committees should best manage tax risk (especially the potential application of the anti-avoidance rules) for material transactions.

Employers should be aware that the due date for reporting employee share scheme interests is fast approaching. Where required by the tax laws, ESS Statements must be given to employees by 14 July and ESS Annual Reports must be given to the Australian Taxation Office by 14 August.

On 12 June 2013, Senator Stephen Conroy and Ministers Greg Combet and David Bradbury issued a joint media release announcing two reviews to support Australia's burgeoning capabilities in cutting edge digital innovation. As part of these reviews, the Government will undertake consultation on Australian crowd-sourced equity funding that will consider 'whether Australia’s corporations law properly regulates and facilitates [equity crowd funding]'.

On 5 May 2013 the High Court unanimously dismissed an appeal from a decision of the Court of Appeal of the Supreme Court of Victoria, which held that Crown Melbourne Limited  did not act unconscionably in respect of, and was not liable to, a patron who lost large sums of money at the Casino. Minter Ellison acted for the Respondents in the proceedings. In this update we review the facts of the case, its progress through the lower courts and explain the High Court's reasoning in dismissing the appeal.

Minter Ellison is at the forefront of developments in the complex, dynamic and highly regulated financial services sector. Our financial services team members are active participants in key services industry associations, contributing to the policy debate and providing input on regulatory change. Here, some of our leading practitioners analyse and comment on the latest tranche of regulations, proposed reforms and reports that are laying the foundations for a stronger financial services sector in Australia.

The announcement of the Australian Federal Budget on 14 May 2013 by the Treasurer, Wayne Swan did not contain any new changes to the taxation of superannuation, but did confirm a number of changes announced before the Budget (and in last year's Budget), ending pre-Budget speculation. There have been many recent announcements and reforms in this area. A 'state of play' summary has been prepared to provide a snap-shot of the current rules for taxing superannuation contributions.

On 9 May 2013 the Australian Prudential Regulation Authority released draft Prudential Standard CPS 220 – Risk Management, draft updated Prudential Standard CPS 510 – Governance and accompanying Discussion Paper – Harmonising Cross-Industry Risk Management Requirements, for public consultation. The standards affect ADIs and life and general insurers. APRA has proposed the cross-industry standards as part of its broader harmonisation and consolidation process, which has already seen the implementation of harmonised prudential standards on outsourcing, business continuity management, governance and fitness and propriety. However, in addition to harmonisation, the standards also include significant new risk management governance requirements.

On 6 May 2013, the Australian Securities Exchange issued proposed amendments to the Listing Rules to facilitate rights issues. The Exposure Draft includes amendments to shorten the timetables for entitlement offers and to reduce the number of circumstances in which issuers would need to apply to the ASX for waivers. The amendments intend to facilitate capital raisings by addressing recent market developments and regulatory innovations.

In Matthew Maxwell v Highway Hauliers Pty Ltd [2013] WASCA 115 delivered on 6 May 2013, the Western Australian Court of Appeal considered the appropriate statutory construction of s54(1) of the Insurance Contracts Act 1984 and arrived at a different result to the Queensland Court of Appeal when applying it to a similar scenario. The Western Australian Court of Appeal took a broader view of the nature and type of insurance in issue.

As part of the federal government's 'Stronger Super' package of reforms, new portfolio holdings disclosure obligations will be imposed on trustees of registrable superannuation entities (RSEs). The federal government has now released draft regulations which set out the manner in which portfolio holdings will need to be disclosed.

On 26 April 2013 Treasury released the Government response to the Parliamentary Joint Committee on Corporations and Financial Services report on the collapse of Trio Capital and to the Richard St. John report on Compensation arrangements for consumers of financial services. Although preliminary, the response gives a clear signal to industry regarding the shape of future developments in financial services regulation.

The Personal Property Securities Act 2009 (Cth) and new legislative regime governing security interests in personal property have presented an interesting challenge to our clients and the broader legal community. In this update we discuss the key practical issues facing businesses operating under the new regime and provide tips on how to deal with them.

The Australasian Retail Credit Association has released for public consultation a draft of the new Credit Reporting Code of Conduct that it is developing at the Privacy Commissioner's request. The release of the draft Code follows the passing of the Privacy Amendment (Enhancing Privacy Protection) Act 2012 last November, which made substantial changes to the Commonwealth Privacy Act 1988 including the replacement of the current credit reporting system by Part IIIA of the amended Act and the requirement for a new Code to be developed.

A further tranche of tax legislation to exempt eligible foreign funds from Australian income tax has been released for public comment. This legislation (once enacted) will extend the Investment Manager Regime (IMR) exemption, to apply from 1 July 2011 (for the 2011- 2012 and later income years).

A number of FSA regulated investment managers and advisers who provide financial services to wholesale clients in Australia rely upon on the exemption from the requirement to hold an Australian financial services licence (AFSL) pursuant to Class Order 03/1099 (Class Order).

The Australian Securities and Investments Commission (ASIC) is proposing to amend the Class Order so that the change in the UK regulator from the Financial Services Authority (FSA) to the Financial Conduct Authority (FCA) will not of itself trigger any notification requirement to ASIC by these providers (having regard to the notification requirement contained in the Class Order).

As part of the federal government's 'Stronger Super' package of reforms, from 1 July 2013 new portfolio holdings disclosure obligations will be imposed on trustees of registrable superannuation entities and other parties investing or holding superannuation monies.

The Final Report of the Independent Inquiry into Construction Industry Insolvency in NSW, chaired by Mr Bruce Collins QC, has been made public. The NSW Government set up the inquiry to assess the cause and extent of insolvency in the building and construction industry and recommend measures to better protect subcontractors from the effects of insolvency.

The Australian Taxation Office has indicated it will withdraw its controversial draft taxation ruling for stapled groups - TR 2012/D5 'Income tax: debt and equity interests: when is a public unit trust in a stapled group a connected entity of a company for the purposes of paragraph 974-80(1)(b) of the Income Tax Assessment Act 1997'.

ASIC has today released guidance on approving opt-in codes. The conflicted remuneration guidance is now not due until Monday 4 March

The final RG is in the end very similar to CP 189. ASIC has not taken the opportunity to provide more detailed guidance on many of the issues industry is confronting in implementing the ban on conflicted remuneration and has in some areas watered down its guidance, particularly as previously flagged by removing the 5% and 7% thresholds for employee performance benefits.

The draft regulations propose to clarify once and for all that grandfathering will not apply to new products acquired after 1 July 2014: draft regs 7.7A.16-16A. In effect this means that grandfathering will have two phases. During 1 July 2013 – 30 June 2014, grandfathering will apply to new client and new investments where payments are made under an arrangement entered before 1 July 2013. From 1 July 2014, grandfathering will only apply to investments made before 1 July 2014 where payments are made under an arrangement entered before 1 July 2013.

On 15 February 2013 the New Zealand Financial Markets Authority (NZFMA) announced its review of the Financial Advisers (Australian Licensees) Exemption Notice 2011 (Exemption Notice), due to expire on 30 June 2013 (the Announcement).

The Commonwealth Government progressed its agenda to assist in deepening the domestic retail corporate bond market by releasing an exposure draft Corporate Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 on Friday, 11 January 2013. In this alert we examine the features of a 'simple corporate bond' and the mandatory two-part prospectus, and consider the implications of the reforms for the retail corporate bond market.

On 28 December 2012, the PRC National People’s Congress passed Amendments to the PRC Labour Contract Law (the Amendments) in relation to the labour dispatch arrangement. The Amendments will come into force on 1 July 2013.

On 31 December 2012, the China International Economic and Trade Arbitration Commission (CIETAC), a foreign-related arbitration commission set up by the China Council for the Promotion of International Trade (also known as the China Chamber of International Commerce) (CCPIT), released its Announcement on Issues Concerning CIETAC Shanghai Sub-Commission and CIETAC South China Sub-Commission" (the Latest Announcement). This is the latest development in a dispute, which has been on foot since April 2012, between CIETAC, the Shanghai Sub-Commission of CIETAC (CIETAC Shanghai), and the Shenzhen Court of International Arbitration (SCIA) (the CIETAC Dispute). SCIA was known as the South China Sub-Commission of CIETAC before 22 October 2012.

Treasury has released an exposure draft of the Insurance Contracts Amendment Bill 2013 (Cth) for public consultation, which reintroduces reforms to the Insurance Contracts Act 1984 (Cth) proposed by the Insurance Contracts Amendment Bill 2010 (Cth) which lapsed in 2010 due to the prorogation of Parliament. This Alert discusses the key differences between the two Bills and provides a brief outline of the affected provisions of the Act. 

The Government has registered the third tranche of the FOFA regulations, with some significant changes. For your information we have summarised the key changes. A copy of the regulations and the explanatory statement is attached.

The Australian Securities & Investments Commission has released ASIC Consultation Paper 194 setting out proposed financial requirements for custodians, responsible entities holding scheme assets, IDPS providers and wholesale trustees.

Crowd funding or crowd-sourced fundraising is a new and rapidly evolving form of capital raising that is likely to be actively embraced by small enterprises. Broadly, it encompasses schemes that seek to raise funds, typically for business proposals and 'start up' companies, through donations from internet users.

ASIC has released a new consultation paper in relation to the Future of Financial Advice (FOFA) legislation. This paper focuses on approval of codes of conduct for the exemption to the opt-in requirement for ongoing fee arrangements. Consultation paper 191 (CP 191) invites public feedback with submissions due by 4 December 2012. At the same time, the Financial Planning Association (FPA) has released a consultation paper on changes to its code which in part seek to address the opt-in requirement.

In determining that a litigation funding agreement between International Litigation Partners Pte (ILP) and Chameleon Mining NL (receivers and managers appointed) (Chameleon) is a credit facility under Chapter 7 of the Corporations Act 2001 (Cth) (Corporations Act), the High Court has taken a very broad interpretation of 'credit facility', which could, in turn, bring the regulatory treatment of a number of financial instruments, including swaps and other derivatives, into doubt.

On 4 October 2012 the Victorian Court of Appeal handed down its appeal decision in 360 Capital RE Limited v James Watts & Ors [2012] VSCA 234 regarding the ability of responsible entities to unilaterally amend scheme constitutions in accordance with section 601GC(1)(b) of the Corporations Act 2001 (Cth).

ASIC has released a consultation paper on the conflicted remuneration provisions under the Future of Financial Advice (FOFA) legislation.  Consultation Paper 189 (CP 189) invites public feedback with submissions due by 9 November 2012.

The Government has also finally released grandfathering regulations for payments by platforms.  It has also indicated that it will not be making the draft grandfathering regulation released in May 2012.

On 16 July 2009, the Australian and New Zealand Governments entered into the Trans-Tasman Retirement Savings Portability Arrangement (Arrangement).

The Arrangement was stated as having the intention of enhancing a seamless trans-Tasman labour market by providing the ability for retirement savings to be transferred between an Australian complying superannuation fund and a New Zealand KiwiSaver scheme, with minimal compliance and administration costs. The Arrangement is subject to a number of restrictions, as outlined in the Arrangement document.

On 19 September 2012, the Australian Securities Exchange (ASX) released the ASX BookBuild: Bringing Efficiency, Fairness and Transparency to the Primary Equity Market (Consultation Paper) regarding ASX BookBuild. ASX BookBuild is an automated on-market service that ASX proposes to introduce to provide issuers with an alternative to off-market bookbuild processes when conducting capital raisings.

ASIC has revisited the long standing guidance contained in Regulatory Guide 134: Managed investments: Constitutions and released Consultation Paper 188: Managed investments: Constitutions – Updates to RG 134. 

The Australian Securities and Investments Commission (ASIC) has released a report (298) on its review of the adequacy of risk management systems adopted by responsible entities (REs) of registered managed investment schemes.

On 27 August 2012, the Financial Services Council released its  "Superannuation Governance Policy" (FSC Standard) which sets out proposed new binding requirements on FSC members that hold an RSE licence to operate public offer funds.

The High Court has allowed an appeal from a limited aspect of Justice Gordon's recent judgment on the enforceability of exception fees charged by ANZ Bank.

Yesterday the High Court heard an Appeal from a limited aspect of Justice Gordon's recent Judgment on the enforceability of exception fees charged by the ANZ Bank.

Following discussions and consultation with the industry, the Corporations and Markets Advisory Committee (CAMAC) has published its report on Managed Investment Schemes providing recommendations to the Government on various matters concerning the regulation of managed investment schemes under Chapter 5C of the Corporations Act.

This alert outlines some of the key proposals recommended by the CAMAC.

APRA has released a letter setting out additional proposed changes to the existing proposed changes to the reporting standards as a result of the review of capital standards for insurers.

On Tuesday 31 July, ASIC released enhanced financial requirements for Australian financial service licensees who issue over-the-counter (OTC) derivatives to retail clients. ASIC had found that poorly resourced issuers of retail OTC derivatives are less likely to carry out adequate supervisory measures and therefore more likely to have compliance breaches. The enhanced requirements are in response to ASIC's May 2011 consultation paper and have been introduced to ensure that licensees have adequate financial resources to better manage their operational risk. The new requirements commence on 31 January 2013.

A draft ruling issued by the  Australian Taxation Office ('Income tax: debt and equity interests: when is a public unit trust in a stapled group a connected entity of a company for the purposes of paragraph 974-80(1)(b) of the Income Tax Assessment Act 1997) will significantly impact the tax consequences for past and present capital raisings for stapled groups

The Australian Securities and Investments Commission (ASIC) has announced the outcomes of its recent review of responsible entities which addresses registered managed investment schemes in the unlisted property sector.

Recently, the Australian Securities and Investments Commission released Report 291: Custodial and Depository services in Australia, which sets out ASIC's views on 'good practice' for responsible entities, platform operators, brokers and custodians on a range of issues relevant to custody of assets. It also signals other matters that ASIC intends to consult on with a view to updating its current guidance.

Shortly prior to the release of ASIC's Report, the European Commission released its proposal for amending Directive 2009/65/EC on the remuneration policies of management companies and depositary functions relevant to undertakings for collective investment in transferable securities We summarise the issues and proposals raised in ASIC's Report and the EC's proposal in this update.

With a view to improve the protection of workers' rights and interests and better regulate the labour dispatch regime, on 6 July 2012, the Standing Committee of the National People's Congress of China released the Draft Amendments to PRC Labour Contract Law. This Alert outlines the five primary modifications to the labour dispatch regime contained in the draft amendments.

On 3 July 2012, ASX issued a Consultation Paper Modernising the timetable for Rights Issues: facilitating efficient and timely rights issues.  The Consultation Paper is the latest in a series of proposals by ASX to facilitate capital raisings, to address recent market developments, the needs of issuers and of shareholders, and to reflect the effect of regulatory innovations.

FMA and the Australian Securities & Investments Commission (ASIC) released yesterday mutual recognition arrangements for the financial adviser industry. These will come into effect on 6 July 2012. The regime will facilitate both Australian and New Zealand financial advisers to provide services in each other's countries based on the qualifications and experience they have gained in their home jurisdictions.

In this Australian Tax Brief we summarise the key aspects of the FIN48 and IMR exemptions, and analyse some of the core requirements – including what is an IMR foreign fund and what IMR income is not subject to Australian tax.

The House of Representatives today passed the Government amendments relating to the commencement of the FOFA legislation, which defer the application of key provisions until 1 July 2013 unless a licensee or issuer notifies ASIC that they wish to comply earlier (Application Day). The Bills are now ready for Royal assent by the Governor-General to become law.

ASIC has issued guidance to assist issuers of superannuation products and simple managed investment schemes comply with the shorter product disclosure statement (PDS) regime.

The shorter PDS regime commences fully on 22 June 2012 and is designed to make PDSs shorter and simpler, and help consumers compare financial products more easily. Issuers of new products have been required to comply with the regime since 22 June 2011 and other product issuers have been able to voluntarily opt-in. 
 

The FOFA Bills have today passed the Senate with the Government's changes to delay commencement of the main provisions to 1 July 2013 unless the licensee or product issuer elects to comply early. These changes are in the same form as the Exposure Drafts released in April with technical amendments shown in the attached version of the amendments. The main change is to require ASIC to publish names of those electing to comply early on its website along with a statement that the FOFA obligations and prohibitions apply to them from the nominated date.

The amended Bills will now need to be returned to the House of Representatives before they can become law to enable the House to agree to the amendments made in the Senate.

The PRC's Interpretation of the Supreme People's Court on Application of Laws in the Trial of Cases Involving Sale and Purchase Contracts will take effect from 1 July 2012. Widely regarded as a judicial milestone the promulgation of the Interpretation is expected to contribute to the development of jurisprudence and commerce in China.

In prior years trustees had until 31 August to complete distribution resolutions for the year ended 30 June. In the wake of recent court decisions the Australian Taxation Office (ATO) has scrapped this concession. This year resolutions must be completed by 30 June, which is less than 14 business days time!

The long-anticipated law against 'price signalling' under the Competition and Consumer Act comes into force today, Wednesday 6 June 2012. The laws apply to the deposit taking and advance activities of authorised deposit taking institutions and prohibit certain disclosures of information that substantially lessen competition.

The Australian Government has released draft regulations under the yet-to-be-passed Future of Financial Advice (FOFA) legislation. The regulations have been released in two tranches, and cover:

• excluding new clients and new products from grandfathering
• soft dollar benefits
• excluding product fees from opt-in.

The ATO has warned taxpayers that input tax credits for importation GST will be denied if the importation arrangements are not managed in accordance with the statutory requirements.

It is likely the ATO will now focus on this area and taxpayers will have no excuse if they fail to comply with the criteria necessary to claim credits.

The report by Mr Richard St John into compensation arrangements for consumers of financial services, released on 8 May 2012, has recommended the consideration of key reforms which could have a significant impact on the financial sector. We analyse the report and discuss its key recommendations and their implications for licensees, product issuers and consumers.

On 28 April 2012, the China State Council released the Special Provisions on Labour Protection for Female Employees ('the New Provisions'). The New Provisions came into force on that same date, and superseded the Provisions on Labour Protection for Female Employees promulgated on 21 July 1988.

The New Provisions provide better protection to female employees and cover prohibited work, maternity leave, maternity insurance and sexual harassment.

Minter Ellison's Anthony Oxley and Tony Dhar provide comment on ASIC's new regulatory guidance in relation to advertising financial products and advice services.

The recent announcement that financial planners operating under codes of conduct approved by ASIC will be exempt from so-called ‘opt-in’ requirements included in financial planning reforms has created further confusion in an already uncertain environment, says Christopher Brown, a Minter Ellison partner and specialist in financial services M&A.

A recent decision of the ACT Court of Appeal in Kemp v Ryan has highlighted the need for Calderbank letters to clearly set out what is being offered to resolve proceedings. Failure to do so can result in a Calderbank letter being rendered ineffective.

The Australian Securities and Investments Commission (ASIC) has released  Report 282 Regulation of exchange traded funds which explains its position on various regulatory aspects of exchange traded funds (ETFs) and outlines the key areas it will focus on as the rapidly growing ETF market continues to develop in Australia.

The big news of the day is of course the passing of both FOFA Bills by the House of Representatives yesterday evening. The Bills were passed with the Government amendments previously tabled on 14 March (these amendments can be found on the Parliamentary website for the Bills, here and here).

Following a review of the platforms sector conducted in 2011, the Australian Securities and Investments Commission (ASIC) has released a Consultation Paper proposing a number of changes to its investor directed portfolio service (IDPS) policy.

Australia's carbon pricing mechanism which was introduced by the Clean Energy Legislative Package, will commence on 1 July 2012. Emissions units recognised under the Clean Energy Legislative Package will be considered as financial products under the Corporations Act from that date.

The Senate Economics Committee issued its report on the FOFA Bills today. The Committee has taken a similar approach to the PJC (see our alert) and again its recommendations do not address the substantive concerns or technical issues raised by industry in relation to the FOFA legislation.

The Parliamentary Joint Committee on Corporations and Financial Services (PJC) released its report on the Future of Financial Advice (FOFA) on 29 February 2012 confirming that the 'vast majority' of FOFA provisions should commence on 1 July 2012. The PJC does, however, embrace ASIC's proposal to adopt a facilitative approach to enforcement during the first 12 months, but only where breaches are inadvertent and the result of systems issues. It also embraced the view that ASIC adopt a facilitative approach to enforcement during the first 12 months, demonstrating a measure of accommodation to industry participants where breaches are inadvertent and the result of systems issues. We discuss the key PJC recommendations and summarise the Coalition recommendations in this Alert.

On 13 December 2011, the Commonwealth Treasury released a discussion paper on proposals to enhance the depth and liquidity of the corporate bond market in Australia. The proposed reforms would reduce the current disclosure and liability burden for issuers but retain key investor safeguards.

The Government has just announced its approach to intra-fund advice. Unfortunately, the release does not address the provision of simple or scaled advice by financial planners and advisers. It focuses solely on the provision of intra-fund advice by superannuation trustees.

On 24 November 2011, the Government tabled the second tranche of the FOFA legislation in Parliament after this article was written. As expected, the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 (2nd Tabled Bill) covered the best interests duty, conflicted remuneration and grandfathering.

On Tuesday, 29 November 2011, as part of its Mid-Year Economic and Fiscal Outlook 2011-12, the Federal Government announced a package of changes intended to raise A$11.5 billion in new revenue and savings.

The Government has tabled the second FOFA bill, the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011, in the House of Representatives this morning.

On 10 November 2011, ASIC issued Regulatory Guide 228: Prospectuses: Effective disclosure for retail investors (RG 228) to addresses previous issues with prospectus disclosure, especially the need to provide retail investors with relevant information in a form that can be readily understood. This Alert highlights the key elements of RG 228.

ASIC has issued revised financial requirements for responsible entities of managed investment schemes. The new provisions become operative on 1 November 2012 for both existing and new responsible entities.

Minter Ellison has made a submission to Treasury on the Exposure Draft - Corporations Amendment (Future of Financial Advice) Bill 2011. The submission provides comments on issues such as the conflicted remuneration prohibition, anti-avoidance, on-going fee arrangements and grandfathering.

On 13 October 2011, The Australian Government tabled part of the first tranche of the Future of Financial Advice (FOFA) legislation in the House of Representatives. A number of changes have been made to the Exposure Draft which was released on 29 August 2011, including the removal of the best interests duty provisions. A further draft of these provisions is expected to be released for public consultation in the near future.

On Thursday 6 October the Senate Finance and Public Administration Legislation Committee released its highly anticipated report on the credit reporting provisions of the Exposure Draft of the Australian Privacy Amendment Legislation. The report makes 30 recommendations, many of which are quite significant, in response to numerous submissions and particularly on five key matters: simplification and clarification of language and definitions, the treatments of serious credit infringements, identity theft, the use of hardship flags and complaints handling.

On Wednesday 28 September, the federal government released the second tranche of draft legislation (including an Explanatory Memorandum) designed to give effect to its Future of Financial Advice (FOFA) reforms. The draft Bill addresses conflicted remuneration (including product commissions, volume payments and 'soft dollar' payments). Surprisingly, long-awaited provisions dealing with the 'grandfathering' of existing commission arrangements have been left out of the draft legislation. In this Alert, we will briefly consider the main provisions of the draft Bill, and what their impact is likely to be.  The deadline for submissions to Treasury on the draft Bill is 19 October 2011.

Yesterday, the Australian Government released its Stronger Super Information Package. The Assistant Treasurer, The Hon Bill Shorten MP stated that he expects the Stronger Super legislation to be released in tranches over the next 9 months, with consultation to be undertaken on each tranche. The first tranche dealing with MySuper is expected to be released within a month.

Minter Ellison has made a submission to Treasury on the likely impacts of key provisions of the Draft Corporations Amendment (Future of Financial Advice) Bill 2011.

China's National Development and Reform Commission (NDRC) has moved to regulate the private equity sector in that country. This reflects increased interest from Central government authorities in ensuring there is adequate regulatory control over this growing investment sector.

Under the new rules, enterprises are being encouraged (and in some cases required) to file certain information. This represents a significant development for an industry that has not been accustomed to mandatory disclosure of financial and investment details.

The Australian Government has released for consultation the Exposure Draft of the first tranche of the long-awaited Future of Financial Advice legislation. It covers the best interests duty, a new client priority duty, the opt-in requirements and enhancements to ASIC powers. There are also a few surprises — including the replacement of section 945A 'know your client' with some very prescriptive requirements for complying with the best interests duty. Submissions are due on 16 September 2011.

Australian tax reforms for foreign funds

The Australian Government has announced that it intends as an interim measure to amend the Income Tax Assessment Act 1936 (the Tax Act) to:

1. align the concept of 'income of the trust estate' (ie distributable income) with the tax law concept of 'net income of the trust estate' (ie taxable income), and
2. ensure that franked distributions (including the attached franking credits) and capital gains can be streamed to specified beneficiaries.

The Assistant Treasurer released an Exposure Draft (on 17 February 2011) of the proposed new Foreign Source Income Deferral rules (the Exposure Draft).

The Exposure Draft sets out the proposed reforms for:

• Australia's Controlled Foreign Company (CFC) rules, and
• new integrity measures (following the repeal of the Foreign Investment Fund rules) in the form of Foreign Accumulation Fund (FAF) rules.