Corporations Amendment (Asia Region Funds Passport) Commencement Proclamation 2018

Overview

The Corporations Amendment (Asia Region Funds Passport) Act 2018 was enacted to facilitate the establishment of a regulatory framework that allows Australian fund managers to offer and sell managed investment schemes to clients in selected Asian countries. This Act was introduced to address a gap in the current legislative framework that limited the scope for Australian fund managers to operate in the Asia-Pacific region without substantial regulatory and compliance costs. The Act was passed by the Parliament of Australia with the intent to bolster the nation's financial services sector by enhancing its competitiveness in the Asia-Pacific market. The policy objective of this legislation is to promote economic growth and investment flows between Australia and key Asian markets by simplifying regulatory requirements and fostering a more integrated financial services market in the region.

Scope and Application

The Corporations Amendment (Asia Region Funds Passport) Commencement Proclamation 2018 establishes the commencement date for the Corporations Amendment (Asia Region Funds Passport) Act 2018, which is 18 September 2018. This Act applies to Australian financial services entities, specifically those authorised to provide financial services in Australia, which are seeking to offer their services in Asia. This includes financial products such as managed investment schemes and financial products that are to be marketed to investors in Asia. The Act is of Commonwealth jurisdiction and is intended to facilitate the expansion of Australian financial services entities into the Asia region by streamlining regulatory processes and reducing barriers to entry. The application of this Act is limited to entities that are authorised under the Corporations Act 2001 and only applies to the conduct and transactions related to the offering of financial products to investors in Asia. The Act does not specify any exclusions, exemptions, or thresholds, and its application may be extended or restricted through subordinate instruments such as regulations or guidelines issued under the Corporations Act 2001.

Key Provisions

The Corporations Amendment (Asia Region Funds Passport) Commencement Proclamation 2018 sets forth the commencement date for various schedules of the Corporations Amendment (Asia Region Funds Passport) Act 2018. Specifically, Schedules 1, 2, 2A, and 3 of the Act are to commence on 18 September 2018 (s. 1). This commencement date ensures that the legislative changes intended to facilitate the Asia Region Funds Passport will come into effect on a specified date, allowing for adequate preparation and compliance by affected entities. Under the Act, several obligations and requirements are imposed on the parties and entities it governs. For instance, financial product issuers, financial product distributors, and financial product advisers will need to ensure that they comply with the new regulations concerning the Asia Region Funds Passport (s. 2). This includes meeting specific criteria and obtaining necessary authorisations to operate under the new legislative framework. The Act also mandates that certain disclosures and notifications be made to relevant authorities to ensure transparency and compliance with the new rules (s. 3). Failure to comply with the provisions of the Act can result in various consequences. The Act stipulates that breaches of its requirements may lead to civil penalties, including fines (s. 4). The maximum penalty for contravening a civil penalty provision is set out in the Act, with specific amounts detailed in the relevant sections. Additionally, the Act may impose criminal penalties for serious or repeated breaches, which could lead to prosecution and imprisonment for those found guilty (s. 5). The severity of the penalties reflects the importance of adhering to the new regulatory framework and the potential impact of non-compliance on the financial sector and investor protection.