ASIC Corporations (Attribution Managed Investment Trusts) Instrument 2016/489

The inserted provisions rest on a set of precise statutory concepts that govern when and how a responsible entity may change a scheme constitution to implement AMIT‑related features.

• "Necessary for or incidental to" AMIT operation (s 601GCA(1)): The threshold for permitted change is framed by the responsible entity’s reasonable conclusion that the modification is needed so the scheme can be operated in a manner permitted by the ITA Act as an AMIT with the responsible entity as trustee. This is a purpose‑linked, evidenceable standard; the text uses the qualifier "reasonably considers" rather than an unreviewable fiat, so the responsible entity must form and be able to justify a reasonable belief that the change is required for AMIT operation (s 601GCA(1)).

• Examples of permissible modifications (s 601GCA(2)): The statute lists three types of modifications without limiting the power to them.

  • Enabling the responsible entity to make specific choices under the ITA Act: those listed are choices referred to by subparagraph 276‑10(1)(e)(i) and paragraph 276‑20(1)(d) of the ITA Act (s 601GCA(2)(a)).
  • Treating each separate class of interests as a separate AMIT where applicable (s 601GCA(2)(b)). This creates a path to class‑level AMIT treatment within a multi‑class scheme.
  • Ensuring the responsible entity is indemnified out of scheme property for tax liabilities incurred in the proper performance of duties where those liabilities are attribution income tax liabilities of the responsible entity, or liabilities that arise because a member claims in relation to an attribution by the responsible entity under ITA s 276‑210 (s 601GCA(2)(c)(i)-(ii)).

• Procedural pathways for different investor mixes (s 601GCA(3)):

  • If all members acquired interests as wholesale clients (meaning the Corporations Act definition at s 761G applies), the responsible entity must have taken reasonable steps to consult with each member (s 601GCA(3)(a)).
  • In other cases, the responsible entity may instead publish a notice on its website that meets particular content and accessibility requirements for no less than seven days, and can proceed provided members controlling at least 5% of votes do not request a meeting to consider a special resolution (s 601GCA(3)(b) and (4)).

• Repeal and replacement option (s 601GCA(5)): The responsible entity may choose to repeal and replace the constitution, rather than amend it, provided the replacement is substantively equivalent to the amendment and the procedural safeguards applicable to modifications were observed as if a modification were proposed.

• Override of entrenchment (s 601GCA(6)): The power is exercisable even where the existing constitution contains provisions limiting modifications to the paths set out in 601GC(1)(a) or (b). That is, the statutory power displaces internal constitutional entrenchment on these specified AMIT‑related changes.

• Notice and timing obligations (s 601GCB): After a modification or repeal and replacement under 601GCA, the responsible entity must give written notice to each member summarising reasons and effects no later than the date of the first communication to all members after the change, and the notice must be clear and concise (s 601GCB(2)-(3)).

• Cross‑references and definitions (s 601GCA(7)): The instrument imports the meaning of "AMIT" from ITA s 276‑10, "ITA Act" as the Income Tax Assessment Act 1997, and "wholesale client" from Corporations Act s 761G. The term "attribution income tax liability" is defined for these provisions as an ITA income tax liability that arises because the scheme is operated as an AMIT (s 601GCA(7)).

These concepts create a statutory mechanism that privileges operational changes for tax treatment (AMIT) and puts in place a streamlined member consultation and notification regime targeted to the tax implementation purpose.

Primary actors and affected parties under these provisions are the following, and the statute specifies how the power allocates decision‑rights and costs among them.

• Responsible entities: The responsible entity (RE) of a registered managed investment scheme is the decision‑maker. The RE gains an explicit statutory power to modify, or repeal and replace, the constitution for AMIT purposes (s 601GCA(1) and (5)). The RE therefore controls whether the scheme becomes structured to operate as an AMIT, subject to the procedural preconditions and its ongoing duty to act in members’ best interests (note referencing paragraph 601FC(1)(c)).

• Members of the scheme: Members are the people with interests in the scheme. The statute affects members in multiple ways:

  • It reduces the threshold needed to change the constitution for AMIT implementation by allowing the RE to rely on a website notice procedure rather than a full member meeting unless members with at least 5% of votes request otherwise (s 601GCA(3)(b)(i)-(ii), (4)).
  • Members may face different tax treatments if the scheme becomes an AMIT, because the amendments explicitly contemplate allocating tax liabilities under the ITA Act and indemnifying the RE out of scheme property for certain attribution tax liabilities that affect the RE or arise from attributions to members (s 601GCA(2)(c)).
  • Members are entitled to written notice after any change, summarising reasons and effects, delivered no later than the first communication to all members after the change (s 601GCB(2)-(3)). The content and form of the pre‑modification notice for non‑wholesale schemes is also specified (s 601GCA(4)).

• Wholesale vs retail members: The pathway differs where all members are wholesale clients. If all members acquired interests as wholesale clients (s 601GCA(3)(a)), the RE must have taken reasonable steps to consult each member. If any members are not wholesale clients, the website‑notice route with the 5% request threshold applies (s 601GCA(3)(b)). The distinction changes the intensity of pre‑decision engagement with members and therefore affects the RE’s compliance obligations.

• Scheme property and claimants: The power expressly contemplates inserting or modifying indemnities that allow the RE to be indemnified out of scheme property for certain tax liabilities (s 601GCA(2)(c)). That has immediate consequences for the priority of claims against scheme property, because an indemnity payable from scheme property can reduce amounts available to other claimants or members.

• Tax advisers, auditors and administrators: While not named in the text, the practical operation of the power will involve tax advisers (to determine what constitutional changes the ITA Act requires or permits under s 276‑10, s 276‑20 and s 276‑210), administrators to implement class‑by‑class accounting where applicable, and auditors to confirm compliance with accounting and disclosure standards. The statute explicitly cross‑references those ITA sections (s 601GCA(2)(a), (7)).

• Future claimants (members or former members): The indemnity provision specifically contemplates liabilities that "result from a member or former member making a claim against the responsible entity in relation to an attribution by the responsible entity under section 276‑210 of the ITA Act to the interests held by the member or former member" (s 601GCA(2)(c)(ii)(B)). This recognises that member claims for tax attributions might create liabilities and permits the constitution to allocate those liabilities to scheme property.

• Constitutions with entrenched amendment rules: Schemes that previously contained limits on amendment or replacement tied to 601GC(1)(a) or (b) are affected because 601GCA(6) enables the RE to modify or replace the constitution for AMIT purposes regardless of those entrenched provisions. This reallocates amendment power from member vote entrenchments to a statutory pathway in the narrow AMIT context.

In short, decision rights lie with the responsible entity subject to procedural constraints, while the costs can fall on members indirectly (via altered tax treatment or scheme property indemnities), and the duty framework remains anchored to the RE’s best interests obligation (note referencing 601FC(1)(c)).

The inserted text creates specific rights for the responsible entity and sets procedural duties that attach to the exercise of that right. It does not create new criminal offences or express civil penalties within the inserted provisions themselves. The material duties and rights are as follows, with the statutory source noted.

Rights of the responsible entity

• Power to modify constitution for AMIT operation: The RE has a statutory right to modify the constitution to the extent the RE reasonably considers necessary for or incidental to operating the scheme as an AMIT with the RE as trustee (s 601GCA(1)). This is a positive statutory right to change constitutional terms without needing the ordinary amendment paths if the statutory conditions are satisfied.

• Power to repeal and replace the constitution: The RE may repeal and replace the constitution rather than amend it, provided the replacement has the same effect as the amendment and the procedural requirements were met as if it were a modification (s 601GCA(5)).

• Right to create indemnities from scheme property: The RE may insert indemnity provisions ensuring it is indemnified out of scheme property for specified attribution income tax liabilities incurred in the proper performance of duties, and for liabilities that result from member or former member claims in relation to attributions under ITA s 276‑210 (s 601GCA(2)(c)).

• Right to disregard entrenched constitutional amendment limits: The statutory power is exercisable even if the constitution includes provisions that restrict modification or replacement to the paths in 601GC(1)(a) or (b) (s 601GCA(6)). The right therefore displaces internal constitutional barriers in the defined AMIT implementation context.

Duties and constraints on the responsible entity

• Best interests duty: The note appended to the inserted sections directs that the responsible entity must act in the best interests of members when exercising these powers, referencing paragraph 601FC(1)(c). The note is statutory text signalling that the exercise of the power remains subject to existing duties under Chapter 5C (note after s 601GCA).

• Reasonableness standard: The RE may exercise the power only where it "reasonably considers" the modification is necessary or incidental to AMIT operation. That introduces an objective standard into the decision process (s 601GCA(1)).

• Consultation and notice obligations:

  • If all members are wholesale clients, the RE must have taken reasonable steps to consult with each member about the proposed modification before making it (s 601GCA(3)(a)).
  • Otherwise, the RE must publish a specified notice on its website for a minimum of seven days in a manner likely to be seen by a person looking for scheme information, and not have received requests representing at least 5% of votes to call and arrange a meeting as specified in the notice (s 601GCA(3)(b)).
  • The website notice must summarise reason and effect, state the 5% request test and the deadline, provide an email address for requests, and be clear and concise (s 601GCA(4)).
  • After modification or replacement, the RE must give each member a written notice summarising reasons and effects no later than the date of the first communication by the RE to all members after the change (s 601GCB(2)-(3)).

• Procedural recordkeeping duties implied: While the text does not set explicit recordkeeping penalties, compliance will require the RE to maintain evidence: records of the reasonable consideration, copies of notices and website publications, proof of consultation steps for wholesale members, votes and any requests to call meetings.

Rights of members

• Right to request a meeting: Members with at least 5% of votes that may be cast on the resolution can request that the RE call and arrange to hold a meeting to consider and vote on a special resolution to modify the constitution as proposed, provided they do so by the specified deadline in the website notice (s 601GCA(3)(b)(ii), (4)(b)).

• Right to receive a post‑change written explanation: Following modification or replacement, each member must be given a written summary of reasons and effects, delivered no later than the RE’s first communication to all members after the change (s 601GCB(2)-(3)).

Limitations and interpretive markers

• Narrow subject matter: The statutory right applies only to constitutional modifications necessary for or incidental to operating the scheme as an AMIT with the RE as trustee (s 601GCA(1)). Modifications unrelated to AMIT operation are outside the statutory power.

• Examples are non‑limiting: The examples in s 601GCA(2) are expressly "without limitation", which permits broader AMIT‑related constitutional changes beyond the examples, but still constrained by the necessity/incidence test.

• Transitional flexibility: The consultation and notice periods may occur partly or wholly before commencement (s 601GCA(8)). This affects duty timing where steps were already taken prior to commencement.

In short, the provisions create a conditional statutory amendment power for AMIT implementation, tie that power to procedural duties, maintain the RE’s best interests obligation, and give members limited rights to request a meeting and to receive notice.

The inserted provisions themselves do not create expressed civil penalties, criminal offences, or an enforcement scheme specific to these powers. The statutory text prescribes procedural requirements and duties but does not set out explicit penalty clauses in the sections provided (see ss 601GCA and 601GCB). Enforcement and legal consequences therefore depend on other provisions of the Corporations Act and the remedies that exist for breach of duties and disclosure obligations elsewhere in Chapter 5C and the wider Act.

What the text does specify as enforceable obligations and the likely legal touchpoints

• Procedural obligations: The RE must satisfy the consultation or website notice and 5% request requirements prior to modifying the constitution (s 601GCA(3)-(4)). After modification, the RE must provide written notice to each member summarising reasons and effects, no later than the first communication to all members after the change (s 601GCB(2)-(3)). Non‑compliance with these procedural obligations is a breach of the statutory scheme in those sections but the inserted text does not specify consequences within those sections.

• Best interests duty: The statutory note reminds the RE that the exercise of power is subject to the duty to act in members' best interests under paragraph 601FC(1)(c). Breach of that duty could give rise to liabilities or enforcement action under existing provisions elsewhere in the Act (the note points parties to the source duty). The inserted text does not itself specify the remedies that attach to a breach of 601FC(1)(c).

• Reasonableness and quantifiable thresholds: The statutory standards such as "reasonably considers", "reasonable steps to consult", "clear, concise and effective manner", and the 5% threshold are objective or semi‑objective standards that could be tested in proceedings if contested. The inserted text does not specify who enforces these standards; standard avenues are court proceedings by aggrieved members or regulatory action under provisions that govern RE conduct in the Act.

Limitations and implications for enforcement

• No express monetary penalties in these sections: Because the provisions do not themselves set out civil penalty amounts or criminal sanctions, enforcement will rely on broader statutory powers, equitable remedies, or regulatory action under the Corporations Act and relevant administrative regimes. The text does not expand or create new enforcement powers.

• Litigation and regulatory recourse remain possible on other bases: Given the references to duty and procedural standards, failure to comply with s 601GCA(3)-(5) or s 601GCB(2)-(3), or to act in members’ best interests, could be actionable under other provisions of the Corporations Act or by member actions; the inserted text signals the applicable duties but does not itself prescribe penalties.

• Practical enforcement vectors: In practice, compliance failures will be relevant to any claim for breach of duty, for misleading or deceptive conduct where communications are false or incomplete, and to any regulatory investigation into the conduct of the responsible entity. The provided instrument leaves these enforcement linkages to the pre‑existing legal framework rather than creating a new one.

In summary, the statutory additions set duties and thresholds to be met when the RE changes the constitution for AMIT purposes, but they do not in themselves establish a penalties regime. Enforcement will thus depend on the application of existing statutory duties, equitable rules, and whatever enforcement mechanisms the broader Act supplies, as referenced by the note to paragraph 601FC(1)(c).

The inserted sections explicitly cross‑link to the Income Tax Assessment Act 1997 and to existing definitions in the Corporations Act. They also operate within the regulatory framework established by Chapter 5C. The key intersections are as follows.

Interaction with the ITA Act (income tax law)

• AMIT framework: The power is designed specifically to enable operation of a managed investment scheme as an attribution managed investment trust, the concept and relevant election rules for which are defined in ITA s 276‑10 and s 276‑20. The insertion directly references those ITA provisions: enabling the RE to make choices for the purposes of subparagraph 276‑10(1)(e)(i) or paragraph 276‑20(1)(d) of the ITA Act is a specified example of permissible constitutional change (s 601GCA(2)(a)).

• Attribution and member tax liabilities: The indemnity examples reference ITA s 276‑210, which deals with attribution by the RE under the ITA Act (s 601GCA(2)(c)(ii)(B)). The statute therefore contemplates constitutional measures that address tax consequences created under the ITA Act and specifically connects the scheme’s internal liabilities and indemnities to tax attributions under the ITA Act.

Interaction with Corporations Act Chapter 5C definitions and duties

• Definition imports: The inserted provisions import "AMIT" as defined by ITA s 276‑10, "ITA Act" as the Income Tax Assessment Act 1997, and "wholesale client" as defined in s 761G of the Corporations Act (s 601GCA(7)). The wholesale client definition determines whether the RE follows the "reasonable steps to consult each member" route or the website notice route (s 601GCA(3)(a) and (b)).

• Relationship to Part 5C.3 amendment rules: The instrument explicitly amends Part 5C.3 by inserting s 601GCA as an additional ground under which a constitution may be modified by the RE (see the change to paragraph 601GC(1)(b) and the new 601GCA, as described at the start of the text). The effect is to create an express statutory exception or alternative to other constitutional amendment requirements set out elsewhere in Part 5C.

• Best interests duty: The note references paragraph 601FC(1)(c), the existing duty that the responsible entity must act in members’ best interests. That cross‑reference signals that the RE’s exercise of the newly conferred power remains subject to existing fiduciary‑style duties under Chapter 5C.

Interaction with scheme constitutions and private law

• Overrides internal entrenchment: Section 601GCA(6) permits the RE to modify or replace the constitution under these powers even when the constitution contains entrenchment clauses limiting alteration to certain pathways in 601GC(1)(a) or (b). This is a statutory override of internal contractual constraints for the limited AMIT purpose.

• Effect on scheme property and priority of claims: Allowing indemnities payable out of scheme property for specified tax liabilities (s 601GCA(2)(c)) may alter the distributional outcomes among claimants and members under the existing private law rights attached to scheme property. The inserted text does not amend property law per se, but it permits the constitution to be adjusted to change how scheme property is used to meet tax liabilities.

Interaction with disclosure and member rights norms

• Meeting thresholds and special resolutions: The mechanism creates a low member trigger for stopping the RE proceeding by requiring members holding at least 5% of votes to request a meeting (s 601GCA(3)(b)(ii), (4)(b)). It uses the special resolution meeting as the potential foil, but the inserted sections do not replace other voting or disclosure obligations that may apply under the Corporations Act or the constitution.

Transitional and commencement timing

• Consultation and notice may occur before commencement: Section 601GCA(8) expressly permits the consultation in s 601GCA(3)(a) and the relevant period in s 601GCA(3)(b) to occur partly or wholly before commencement. This connects the statutory process to existing preparatory work performed before the new sections come into force.

What the statute does not do

• It does not alter the ITA Act: The inserted provisions do not change the substantive tax law. They create a governance path to align scheme constitutions with AMIT requirements but leave the substantive tax rules and consequences to the ITA Act.

• It does not create a new enforcement regime: As noted, these sections do not contain express penalty or enforcement mechanisms; interaction with enforcement will rely on other parts of the Corporations Act and on remedies available under private law.

Overall, the insertion is designed to sit alongside the ITA Act AMIT regime and existing Chapter 5C governance rules, supplying a targeted constitutional amendment pathway and procedural scaffolding to operationalise AMIT elections and tax‑related constitution changes.

The provided material itself is the legislative insertion and records the amendment mechanics. The changes are framed as modifications to Chapter 5C of the Corporations Act, specifically to Part 5C.3 and paragraph 601GC(1)(b). The amendment history within the supplied text can be described as follows.

• Amendment of paragraph 601GC(1)(b): The text shows that paragraph 601GC(1)(b) is amended by omitting the final full stop and substituting a semicolon plus adding a new paragraph (c) designed to put the statutory AMIT modification power within the existing list of ways a constitution may be modified (the change from "rights." to "rights; or" at the start of the insertion block).

• Insertion of s 601GCA: Immediately after paragraph 601GC, the instrument inserts a new section titled "601GCA Changing the constitution to meet AMIT requirements". This section contains the substantive power for the RE to modify or replace the constitution for AMIT purposes, the list of example modifications, procedural requirements, definitions, a permissive transitional clause allowing pre‑commencement consultation or notice periods, and the override of entrenched constitutional amendment clauses (ss 601GCA(1)-(8)).

• Insertion of s 601GCB: The instrument also inserts a new section 601GCB titled "Notice of modification etc. of constitution for AMIT implementation". Section 601GCB applies where the RE modifies or repeals and replaces the constitution under 601GCA. It requires that each member be given a written notice setting out a summary of reasons and effect and prescribes timing and clarity requirements for that notice (ss 601GCB(1)-(3)).

• Repetition in the provided text: The supplied material repeats the inserted text multiple times in different parts of the excerpt. This duplication appears to be the same amendment text presented more than once, but it does not alter the substance of the insertion.

• Transitional clarification: S 601GCA(8) explicitly provides that the consultation in s 601GCA(3)(a) and the website notice relevant period in s 601GCA(3)(b) may occur partly or wholly before commencement. That is an express transitional clause within the inserted section.

• Connection to existing duties: The note appended to the insertion points readers to paragraph 601FC(1)(c) requiring the RE to act in members' best interests when exercising the power. The note serves as a legislative cross‑reference rather than a substantive amendment.

The supplied material does not contain an explicit commencement date or schedule of enactment in the excerpt. It contains the content that would be added into Part 5C.3. Any legislative instrument implementing these inserts would typically include commencement details and potential consequential amendments elsewhere, but those details are not in the supplied text.

The provided text does not include any litigation history or judicial decisions interpreting or applying the new sections because it is the statutory insertion itself. There are therefore no cases, judgments, or tribunal outcomes recorded in the supplied material that bear on the meaning or application of s 601GCA or s 601GCB.

Potential lines of dispute that the statutory language might generate, and where litigation could focus, include the following. These are logical potential issues arising directly from the statutory terms in the provided text; they are not references to particular cases.

• Whether the responsible entity "reasonably considers" the modification necessary or incidental to AMIT operation (s 601GCA(1)): A member could challenge an RE’s exercise of power by arguing that the RE’s belief was not reasonable, that supporting evidence was inadequate, or that the purported link to ITA compliance was tenuous. Courts would be asked to review reasonableness of decision‑making given the materials the RE had at the time.

• Adequacy of consultation steps for wholesale members (s 601GCA(3)(a)): Where the RE relies on the wholesale‑member pathway, litigation might probe what constitutes "reasonable steps" to consult each wholesale member. The statutory standard is not fully specified; disputes could arise over sufficiency of contact attempts, the information provided, and timing.

• Sufficiency and accessibility of the website notice for non‑wholesale schemes (s 601GCA(3)(b) and (4)): Members may contest whether the notice was published "in a way that it is likely to come to the attention of a person looking for information about the scheme on the website", whether the notice complied with the content requirements, or whether the RE properly monitored and calculated the 5% threshold for requests.

• Calculation and scope of "votes that may be cast on the resolution" (s 601GCA(3)(b)(ii) and (4)(b)(i)): Disputes could arise over how to compute the 5% threshold, for example whether it is based on issued interests, on votes actually exercisable given suspension or forfeiture, or on some other measurement prescribed by the constitution or the Act.

• Validity and scope of indemnities from scheme property (s 601GCA(2)(c)): Litigation could focus on whether an indemnity provision that purports to use scheme property to satisfy certain RE tax liabilities is permissible, whether it was drafted within the "proper performance of duties" limitation, and whether it prejudices members’ rights impermissibly.

• Whether the RE acted in members’ best interests when exercising the statutory power (note to s 601GCA referencing paragraph 601FC(1)(c)): Claims might be brought alleging that although procedural requirements were followed, the RE did not genuinely or objectively act in members’ best interests in choosing AMIT treatment or in designing indemnities.

• Timing and delivery obligations under s 601GCB(2)-(3): Members may assert failure to provide the required written notice "no later than the date of the giving of the first communication by the responsible entity to all members of the scheme after the date when the modification is made" and could challenge any gap between change and notification.

• Use of repeal and replace (s 601GCA(5)): If an RE repeals and replaces a constitution rather than amending it, members might argue the replacement had effects beyond those lawful under the AMIT purpose test or that the RE did not meet the procedural equivalence test.

These are the principal lines of judicial contest the statutory language will make available if disputes arise. The supplied text does not provide outcomes for any of these issues, and it contains no recorded litigation history.

The inserted provisions are targeted and specific, but they contain several drafting and operational features that create traps for the unwary. The following points are practical "gotchas" drawn from the statutory text and its procedural mechanics.

• "Reasonably considers" test requires evidentiary support: The statutory trigger requires that the RE "reasonably considers" the modification is necessary or incidental to AMIT operation (s 601GCA(1)). That imposes an evidentiary expectation. The RE should not rely on a bare assertion. An RE that fails to document the factual and legal basis for its reasonable belief risks a later challenge on reasonableness or best interests grounds.

• Narrow subject but broad drafting: Although the power is limited to modifications necessary or incidental to operating as an AMIT, the examples are non‑limiting (s 601GCA(2)). This means constitutional changes that have secondary commercial or distribution effects might be argued to be incidental. An RE should be cautious about changes that have material non‑tax effects that are not closely linked to AMIT operation.

• Indemnity drafting scope: The indemnity permitted relates to two categories: attribution income tax liability of the RE and liabilities that result from member claims about attributions to members under ITA s 276‑210 (s 601GCA(2)(c)). The indemnity is limited to liabilities "incurred by the responsible entity in relation to the proper performance of its duties" (s 601GCA(2)(c)(i)). The phrases "proper performance" and the scope of indemnity payable from scheme property can be contentious. Broad indemnity language could deplete scheme property and change member entitlements; narrow or unclear drafting could lead to disputes over whether a liability falls within the indemnity.

• Website notice may be inadequate for retail members: Where the RE uses the website notice route, the statutory test requires publication "in a way that it is likely to come to the attention of a person looking for information about the scheme" and for a minimum of seven days (s 601GCA(3)(b)(i)). For schemes with dispersed retail members who may not routinely consult the website, the website route might be challenged as inadequate. The statutory content requirements for the notice are specific but do not compel additional outreach methods.

• Low 5% threshold for members to require a meeting: Members holding at least 5% of votes that may be cast on the resolution can force a meeting (s 601GCA(3)(b)(ii) and (4)(b)(i)). If voting entitlements are concentrated, a small bloc can require a meeting. The RE must monitor vote holdings accurately and be prepared to hold a meeting if the threshold is met.

• Ambiguity about "votes that may be cast on the resolution": The statute requires counting votes that may be cast, not necessarily votes actually cast or held. The constitution or the Act may govern disqualifications or suspensions of voting. The RE must adopt a defensible method for counting for the 5% test.

• "Reasonable steps to consult" wholesale members is open‑ended: Where all members are wholesale clients, the RE must have "taken reasonable steps to consult with each member" (s 601GCA(3)(a)). The content and depth of such consultations are not defined. The RE should document the steps taken, materials provided, timing and responses to avoid later claims the consultation was not reasonable.

• Repeal and replace must have equivalent effect: If the RE elects to repeal and replace the constitution instead of amending it, the replacement must have the effect the constitution would have had if modified under s 601GCA(5)(a). Replacements that change ancillary or unrelated governance arrangements risk being vulnerable to challenge, particularly because s 601GCA(6) permits the power to override entrenching clauses only in relation to the AMIT implementation; it does not authorise wholesale changes beyond the AMIT purpose.

• Post‑change notice timing: The RE must give each member the summary of reasons and effects "no later than the date of the giving of the first communication by the responsible entity to all members of the scheme after the date when the modification is made" (s 601GCB(3)(a)). The phrase creates a tight timing link that could result in non‑compliance if the RE’s next "all members" communication occurs long after the change. Practically, the RE should plan to send the post‑change notice promptly and not defer it.

• Best interests duty persists: Despite the statutory pathway, the RE must exercise the power in members’ best interests (note referencing 601FC(1)(c)). This curtails the RE’s discretion; steps taken purely for group or sponsor commercial convenience that are not in members’ interests may attract consequences under the general duty regime.

• Transitional timing: Consultations and notice periods can be partly or wholly before commencement (s 601GCA(8)). That can lead to claims about reliance on pre‑commencement materials and whether those steps met the statutory thresholds if the RE later seeks to rely on them.

• Interaction with ITA technicalities: The statutory examples refer to particular ITA provisions, including the choice under subparagraph 276‑10(1)(e)(i) and paragraph 276‑20(1)(d) and attribution under s 276‑210. The RE must ensure constitutional drafting aligns precisely with the technical requirements of the ITA Act. A mismatch between constitutional wording and tax law requirements could prevent effective AMIT treatment or create unintended tax exposures.

These "gotchas" show that the statutory power, while conceptually straightforward, imposes precise procedural and drafting obligations that must be managed to avoid disputes and unintended member consequences.

A practically oriented compliance pathway for a responsible entity intending to rely on s 601GCA to implement AMIT‑related constitutional changes should follow a sequence of legal, governance and communications steps. The checklist below follows the statutory requirements and addresses likely operational tasks derived from the text.

1. Establish the factual and legal basis for change

   • Document why constitutional modification is necessary for or incidental to operating the scheme as an AMIT with the RE as trustee (s 601GCA(1)). Prepare a written memorandum that sets out the legal requirements under the ITA Act (referencing s 276‑10, s 276‑20, s 276‑210 where relevant), the specific constitutional provisions that must change, and the link between the proposed drafting and the tax outcomes.
   • Record the RE’s rational decision‑making process to meet the "reasonably considers" standard.

2. Determine member profile and procedural route

   • Establish whether all members acquired interests as wholesale clients under Corporations Act s 761G (s 601GCA(3)(a)). If yes, prepare the wholesale consultation plan. If no, prepare the website notice plan and schedule.

3. Wholesale member consultation

   • If all members are wholesale clients, take "reasonable steps to consult with each member" before making the modification (s 601GCA(3)(a)). Reasonable steps may include personalised notices, circulation of explanatory memoranda, availability of meetings or webinars, and a record of member feedback. Maintain contemporaneous records showing the consultation approach, materials, distribution list, dates and any responses.

4. Website notice route for retail or mixed membership

   • Prepare a website notice that satisfies s 601GCA(4):
     • Summary of reason for and effect of the proposed modification (clear and concise).
     • Statement that the RE will modify the constitution unless it receives written requests to call and arrange a meeting from members holding at least 5% of the votes that may be cast on the resolution, by a specified date that is the last day of the relevant period.
     • Provide a specific email address for written requests.
     • Word and present the notice clearly, concisely and effectively.
   • Publish the notice on the scheme’s website for a period of not less than seven days, in a location likely to be consulted by someone seeking scheme information (s 601GCA(3)(b)(i)). Maintain screenshots, timestamps and analytics showing notice visibility and duration.

5. Monitor and calculate the 5% request threshold

   • Define the denominator for "votes that may be cast on the resolution" in a defensible way, consistent with the constitution and the Act. Document the method for calculating the 5% threshold and maintain contemporaneous voting records.
   • Monitor incoming written requests to call and arrange a meeting. If requests are received from members with at least 5% of votes, follow through by calling and arranging the meeting as specified in the notice; if not, proceed.

6. Drafting the constitutional amendments or replacement

   • Draft the amendment text or replacement constitution ensuring they are limited to changes necessary for or incidental to AMIT operation (s 601GCA(1)-(2)) and, where applicable, enable choices under ITA subparagraph 276‑10(1)(e)(i) and paragraph 276‑20(1)(d), permit class‑by‑class AMIT treatment, and provide indemnities in forms that track s 601GCA(2)(c).
   • When drafting indemnity clauses ensure language is tightly scoped to liabilities "incurred ... in relation to the proper performance of [the RE’s] duties" and to the two categories listed in s 601GCA(2)(c)(ii). Clarify whether indemnity amounts are payable solely from scheme property and be explicit about priority, subrogation and recovery rights.

7. Repeal and replace option

   • If electing to repeal and replace the constitution (s 601GCA(5)), ensure the new constitution has the effect the existing constitution would have had if modified under s 601GCA(1). Document the equivalence analysis and maintain procedural evidence showing that the s 601GCA(3) and (4) requirements were satisfied as if the action were a modification.

8. Record entrenchment analysis

   • Where the constitution contains entrenching clauses limiting amendments via 601GC(1)(a) or (b), record the analysis demonstrating why s 601GCA(6) authorises proceeding despite such entrenchments. Keep contemporaneous legal advice corroborating the statutory override.

9. Pre‑change governance approvals and legal sign‑off

   • Obtain the requisite internal approvals (board or committee approvals) and legal sign‑off documenting the basis for the proposed modifications and confirming compliance with s 601GCA procedural requirements and the RE’s duty to act in members’ best interests (note to s 601GCA referencing 601FC(1)(c)).

10. Execute the modification or replacement

• Make the constitutional amendment or enact the replacement deed once procedural conditions are met and no qualifying meeting request has been made within the specified period, or after the conclusion of consultations with wholesale members (s 601GCA(3)-(5)).

11. Post‑change written member notice

• Give each member a written notice that sets out a summary of reasons for, and the effect of, the modification or explains how the replacement constitution’s effect differs from the previous constitution (s 601GCB(2)). Deliver the notice no later than the date of the first communication to all members following the change (s 601GCB(3)(a)). Ensure the notice is clear, concise and effective (s 601GCB(3)(b)).

12. Record retention and audit trail

• Maintain a comprehensive audit trail: decision memos, legal advice, consultation records or website notice logs, calculation of vote thresholds, copies of communications, and copies of the amended or replacement constitution. Preserve timestamps showing the website publication period and the delivery dates of member notices.

13. Tax and compliance liaison

• Coordinate with tax advisers to ensure the constitutional wording aligns with the technical requirements of the ITA Act (s 276‑10, s 276‑20, s 276‑210). Ensure administrators and auditors are engaged to implement any class‑by‑class accounting, attribution recording, and member reporting changes required for AMIT treatment.

14. Communication and member support

• Prepare an explanation for members that focuses on the tax‑related reasons and effects, including whether their tax treatment will change, whether indemnities could affect scheme property, and where members can obtain further information. Provide channels for questions and retain records of member enquiries and responses.

15. Contingency planning

• If a meeting is requested by members with at least 5% of votes, be prepared to call and arrange the meeting as specified in the notice (s 601GCA(3)(b)(ii) and (4)(b)). Ensure governance processes are prepared for potentially contested votes and legal contingencies.

By following this structured pathway and ensuring thorough documentation at each stage, a responsible entity will build the evidentiary record required by the statutory "reasonably considers" standard, comply with the procedural requirements for consultation and notice, and reduce the risk of later challenge alleging procedural or duty failures.