Corporate Collective Investment Vehicle (CCIV)

OVERVIEW

On 22 February 2022, a new law was passed establishing the company structure known as a “corporate collective investment vehicle” (CCIV) and will be included in the Corporations Act from 1 July 2022. The CCIV is an alternative investment vehicle to manage investment schemes in a way that is a more globally recognisable investment structure, in the anticipation that it will attract more offshore investment into Australian Funds. Chapter 8B will be inserted into the Corporations Act 2001 (Corporations Act) containing the core provisions outlining the establishment of CCIV’s, and their operational and regulatory requirements.

CHARACTERISTICS OF CCIV

A CCIV is an investment vehicle with a corporate structure that has the legal form of a company limited by shares. A CCIV:

will be recognisable as a separate legal entity, therefore able to enter contracts in its own right and deal with its own company shares
will have most of the rights, duties, powers and characteristics of a company
must have a constitution with shareholder rights preserved in relation to adopting, modifying or repealing the constitution
will generally be subject to the ordinary company rules under the Corporations Act (unless otherwise specified).

Some key features of the new laws:

a single CCIV can be an ‘umbrella vehicle’ offering multiple products (sub-funds) and investment strategies within the same vehicle. Each sub-fund will effectively operate as a protected cell for asset and liability purposes
the CCIV will have a single corporate director. The corporate director must be an unlisted public company and holding an AFSL that authorises it to ‘operate the business and conduct the affairs of the CCIV’, which is a new AFSL authorisation
the CCIV must not have any officers or employees other than the single corporate director, although the single corporate director may have officers and employees of its own.
The CCIV is exempt from the requirement to hold an AFSL to issue securities in the CCIV, but the corporate director must hold the relevant authorisation under its AFSL
A CCIV can either be a retail or wholesale CCIV (NOTE: just one retail client will make the CCIV a retail CCIV which will make them subject to greater obligations)
Each retail CCIV must have a compliance plan, compliance plan auditors and annual implementation reviewers.

	Wholesale CCIV	Retail CCIV
Application	Form 5201 and copy of Constitution	Form 5201, copy of constitution and compliance plan
CCIV Constitution	Must specify the requirements that must be complied with for the CCIV to modify, repeal, and/or replace its constitution (s1223F)	Must comply with the content requirements in section 1223G and 1223H. The statutory procedures required to adopt, modify or repeal the constitution of a retail CCIV are set out in Section 1223D(2).
CCIV Compliance Plan	Not required	Signed by all directors of the corporate director and lodged with the application. Must set out adequate measures that the corporate director is to apply to fulfil its responsibilities in relation to the CCIV, to ensure compliance with the Corporations Act and the CCIV constitution.
Registering Sub-funds	Form 502. Review constitution to ensure ongoing compliance with the Corporations Act.	Form 502. Review CCIV constitution and compliance plan to ensure ongoing compliance with the Corporations Act.

STRUCTURE OF A CCIV

The Explanatory Memorandum to the Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021(Cth) issued the following diagram to demonstrate how the new CCIV regulatory framework will operate:

MEETING THE CCIV REGISTRATION REQUIREMENTS

In order to register as a CCIV, the following requirements must be met (s1222 of the Corporations Act):

The company must be a company limited by shares
The company must have a constitution that meets the requirements in Subdivision C of Part 8B.3 of the Corporations Act
The corporate director of the CCIV must be a public company that holds an AFSL, authorising it to operate the business and conduct the affairs of a retail CCIV, Wholesale CCIV, or both
The company must have at least one sub-fund at registration
Each sub-fund must have at least one member on registration
If the company intends to be a retail CCIV at the time of registration, the company must have a compliance plan and compliance plan auditor
The CCIV registration application form must indicate whether the CCIV is intended to be retail or wholesale

PREPARING YOUR APPLICATION

There are 3 elements to the application:

Application form – Form 5201 Application for registration of a corporate collective investment vehicle (available soon)
Copy of the CCIV’s constitution
Copy of the CCIV’s compliance plan signed by all directors (Retail only)

A separate Form 5201 must be completed and lodged for each CCIV proposed to be registered, you will be asked to provide:

The proposed name of the CCIV
The name and address of the registered office of the corporate director
Whether the CCIV is intended to be retail or wholesale at the time of the application
Details of the consenting compliance plan auditor (retail only)
The proposed name of each sub-fund to be registered with the CCIV (initial sub-fund)
For each sub-fund:
- The name and address of each member
- The shares that are referable to the sub-fund

You will also be asked to select the dominant asset type that is relevant to the initial sub-fund(s) – financial assets, derivatives, direct retail property, film, mortgages, crypto-assets, commodities, or primary production. The AFS licence of the corporate director will specify the type(s) of assets that can be held by the retail or wholesale CCIV.

A separate Form 5201 must be completed and lodged for each CCIV proposed for registration.

LODGING YOUR APPLICATION

Form 5201 will need to be printed and completed on paper as ASIC will only accept lodgements by postal mail. You will need to send the completed and signed Form 5201 and all accompanying documents to ASIC, along with a cheque made payable to ASIC for the application fee.

ASIC will assess the application, and once processed they will:

Give the CCIV an ACN
Give the initial sub-fund(s) an Australian registered fund number (ARFN)
Register the CCIV and the initial sub-fund(s)
Send you a certificate of registration

REGISTERING FURTHER SUB-FUNDS

As mentioned, a CCIV must have at least one sub-fund at the time of registration, and to remain registered it must continue to have at least one registered sub-fund.

If you would like to register further sub-funds, you will need to complete Form 5202 Application for registration of a sub-fund of a corporate collective investment vehicle (not yet available). You will need to provide the proposed name of the sub-fund and select the dominant asset kind for the sub-fund.

If your AFS licence has a condition limiting your operations to one retail CCIV with a single sub-fund, you can not apply to register additional retail CCIV’s or sub-funds of the retail CCIV until your licence is varied to remove the condition.

EXPECTATIONS OF A SINGLE CORPORATE DIRECTOR

A CCIV’s single corporate director:

is required to obtain a newly AFSL authorisation to ‘operate the business and conduct the affairs of the CCIV’
must operate in accordance with the conditions of the AFSL authorisation, the CCIV’s constitution, and the Corporations Act, including general directors duties such as the duty to act honestly and in the best interests of all members, as well as additional retail-specific director duties
is responsible for the conduct of the CCIV, and will therefore be subject to criminal and/or civil penalty provisions for any breaches of its AFSL or other relevant laws.

IMPLICATIONS FOR LICENSING AND DISCLOSURE

There will be amendments to Chapter 7 licencing provisions of the Corporations Act, relating to assigning responsibilities for licensing, conduct and disclosure.

Financial Services Licencing	A single corporate director operating a CCIV must be authorised to ‘operate the business and conduct affairs of the CCIV’ under its AFSL. This new financial service will be added to the list available under section 766A of the Corporations Act, along with ‘providing financial product advice’ and ‘dealing in a financial product’.
Disclosure	A CCIV is generally responsible for giving retail clients a PDS relating to the relevant sub-fund, prior to issuing the retail client securities in the relevant sub-fund. The sub-funds PDS may include additional information in relation to the CCIV as a whole. This differs from the requirements for a retail client to be issued with a prospectus for the issue of securities under Part 6D.2 of the Corporations Act. A CCIV’s PDS is generally subject to the same content requirements that ordinarily apply to PDSs for other financial products. This approach is aimed at ensuring consistency with the disclosure arrangements that apply to registered schemes.
Other Legislative Changes	The new law proposes to make changes to other legislation to support the implementation of CCIVs, including amendments to the Australian Securities and Investments Commission Act 2001(Cth), Personal Property Securities Act 2009(Cth), and tax legislation. The ASX is also consulting about proposed changes to the ASX Listing Rules and ASX Operating Rules to allow for listings of CCIVs and sub-funds. The amendments to tax legislation will ensure that the tax treatment of CCIVs align with the existing treatment of attribution managed investment trusts (AMITs). This will provide investors with the benefits of flow-through taxation, subject to a sub-fund not tripping up the traditional public trading trust test that apples to managed investment schemes)

FOR MORE INFORMATION

If you would like more information about registering CCIV’s, the following links may help:

GRC ESSENTIALS CAN HELP

If you require any assistance, we can offer training for your personnel and guidance for your compliance questions. Please don’t hesitate to contact us if you have any questions or if we can help you with any of your compliance matters.