In the 2021/22 Federal budget, the Australian government announced that it would implement a new type of investment vehicle called the Corporate Collective Investment Vehicle (CCIV).
This has been implemented as of 1 July 2022.
The CCIV framework was introduced though the Corporate Collective Investment Vehicle Framework and Other Measures Act 2022 and by adding a new Chapter 8B to the Corporations Act 2001.
A CCIV is a company limited by shares and is required to have at least one sub-fund.
The CCIV is used for funds management and is the umbrella vehicle which can operate one or more sub-funds.
The sub-funds are not separate legal entities.
The sub-fund along with the CCIV must be registered and if there is more than one sub-fund it is a requirement that the assets and liabilities must be attributed to the purpose of that sub-fund and not mixed together.
A sub-fund can acquire shares in another sub-fund in the same CCIV subject to certain restrictions and a single asset may be assigned across multiple sub-funds.
There are two types of CCIV’s – a retail one and a wholesale one.
A CCIV will be a retail CCIV if it satisfies one of three tests under the Act which:
- at least one member of the CCIV is a protected retail client; or
- at least one person is a protected client under a custodial arrangement; or
- at least one member is a protected member of a passport fund.
A CCIV that is not a retail CCIV is a wholesale CCIV.
A CCIV can only have one director and cannot have any employees.
The director is a ‘corporate director’ and must be a public company which holds an Australian Financial Services Licence (AFSL) that authorises it to operate the business and conduct the affairs of a CCIV.
For a retail CCIV, at least half of the individual directors of its corporate director must be external directors.
The CCIV must have a constitution and the constitution of a retail CCIV must:
- make provision for the establishment of sub‑funds, and classes of shares referable to sub‑funds
- make provision for the method by which complaints made by members in relation to the CCIV are to be dealt with
- state that the CCIV has the power to borrow or raise money
- if there are to be any limits on the CCIV’s exercise of the power to borrow or raise money—sets out those limits
- if the CCIV is to acquire in respect of any of its sub‑funds, one or more shares that are referable to another of its sub‑funds—make provision for such acquisitions
- make provision for the shares to be redeemed.
On the other hand a wholesale CCIV must specify the requirements that must be complied with for the CCIV to modify its constitution or repeal its constitution and replace it with a new one.
A CCIV and its initial sub-fund(s) will be established upon registration.
The corporate director of a CCIV may apply to register subsequent sub-funds.
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