ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199

The instrument defines several critical concepts that delimit its scope. Funds management financial service is the central activity. It has two limbs. The first limb covers dealing in, advising on, market making for, or providing custodial/depositary services in relation to offshore fund financial products provided to an eligible Australian user. The second limb covers dealing, advising, market making (for managed investment scheme products only), and custodial/depositary services provided to an eligible Australian user under a portfolio management services mandate. The notes make clear that market making arises from redeeming or buying back financial products, but the exception in subsection 766D(2) of the Corporations Act (which provides that certain transactions do not amount to making a market) applies.

Offshore fund is defined as either a managed investment scheme established outside Australia and not operated in Australia, or a person (not an AFS licensee) that carries on a business of investing in securities, interests in land, interests in other offshore funds, or other investments, and invests funds following an offer of securities or interests. This definition captures typical offshore collective investment vehicles (unit trusts, limited partnerships, corporate funds) that are not registered or operated in Australia. Offshore fund financial product is a security or interest in such an offshore fund, or a financial product issued by or with the authority of the offshore fund or its operator.

Eligible Australian user is a closed list of sophisticated counterparties: responsible entities of registered managed investment schemes; trustees of superannuation funds, approved deposit funds, pooled superannuation trusts, or public sector superannuation schemes with net assets of at least $10 million; trustees of wholesale trusts that hold an AFSL or are exempt under ASIC Corporations (Wholesale Equity Scheme Trustees) Instrument 2017/849; any body regulated by APRA (other than superannuation fund trustees of the types listed); and exempt public authorities other than local councils. This list deliberately excludes retail clients, self-managed superannuation funds (unless they fall within one of the categories, which is unlikely), and most individuals. The $10 million net asset threshold for superannuation funds ensures only institutional-sized funds qualify.

Home jurisdiction is defined as the jurisdiction where the provider has its principal place of business in relation to the provision of the funds management financial services, or if none, the jurisdiction in which it was incorporated or formed. Overseas regulator means a foreign regulatory authority that regulates financial services provided by the person in its home jurisdiction and is established by or for a foreign government or legislative body for that jurisdiction. The instrument requires that overseas regulator to be a signatory to the IOSCO Multilateral Memorandum of Understanding, which facilitates cross-border enforcement cooperation.

Agent for service must be a natural person ordinarily resident in Australia or a company, with name and address provided to ASIC, authorised to accept service of process from ASIC and from any person referred to in subsection 659B(1) of the Act (which covers proceedings relating to financial services law). The agent must be maintained continuously - the condition in section 7 forbids a gap of more than 10 consecutive business days.

The instrument also defines wholesale trust as a trust operated under a managed investment scheme where no interests have been issued to a retail client and the scheme is not registered. This definition interacts with the eligible Australian user category of a trustee of a wholesale trust that holds or is exempt from holding an AFSL.

The instrument directly affects two groups: foreign financial services providers that offer funds management services from outside Australia, and the Australian entities that receive those services. For foreign providers, the exemption removes the need to apply for and maintain an Australian financial services licence, which is a potentially costly and time-consuming process involving compliance with the Corporations Act’s extensive licensing obligations (section 912A general obligations, financial requirements, dispute resolution, training, etc.). The instrument is therefore a deregulatory measure that lowers the barrier for foreign fund managers to service Australian wholesale clients without establishing an Australian office or becoming a licensee.

However, the exemption applies only to providers whose Australian business is limited to the defined funds management financial services. A foreign provider that also engages in other financial services that trigger section 911D - for example, advising on Australian equities, dealing in derivatives to Australian retail clients, or providing general financial advice to Australian individuals - will not be able to rely on the exemption for those activities. The instrument does not create a general foreign financial services provider exemption; it is specific to the funds management context.

The affected Australian users are the eligible Australian user class. These are predominantly institutional investors: responsible entities of registered schemes (i.e., managed investment schemes offered to wholesale and retail investors), trustees of large superannuation funds (over $10 million net assets), APRA-regulated bodies (banks, insurers, superannuation funds), and wholesale trust trustees. By limiting the counterparty to this list, the instrument ensures that only sophisticated, financially literate entities deal with unlicensed foreign providers. The exclusion of local councils from the “exempt public authority” category is noteworthy; local councils are frequently wholesale investors (often with substantial funds under management) and their exclusion suggests a policy judgment that they require the protections of the licensing regime.

The instrument also affects ASIC indirectly. ASIC receives written confirmations from relying providers, which gives it a registry of foreign entities operating under the exemption. ASIC retains powers to direct providers to provide specific information and to request assistance. The overseas regulator must be a signatory to the IOSCO MMoU, giving ASIC a cooperation channel. This reduces the risk of regulatory arbitrage but imposes a triage burden on ASIC to manage the confirmations and monitor compliance.

Finally, local AFS licensees that compete with foreign fund managers may be indirectly affected. The exemption allows foreign providers to compete for the eligible Australian user class without incurring the same compliance costs. To the extent that licensing costs act as a barrier to entry, the exemption reduces that barrier for foreign competitors. This may put downward pressure on fees for wholesale fund management services, which is a pro-competitive effect. The instrument does not, however, create an uneven playing field because Australian fund managers serving the same clientele are themselves often licensees and can still compete on other dimensions (local presence, reputation, relationship).

The instrument imposes no affirmative duties on the exempt provider beyond those necessary to qualify for and maintain the exemption. The core duty is condition 7: the provider must ensure it has an agent for service at all times, with no gaps exceeding 10 consecutive business days. Further, it must notify ASIC in writing within 10 business days of any natural person ceasing or commencing to be its agent, or any change to the name or address of the agent. This is a straightforward but critical obligation; failure to have an agent for service for a longer period would mean the exemption no longer applies, potentially exposing the provider to liability for carrying on an unlicensed financial services business.

The right conferred is the exemption from subsection 911A(1) - the provider does not need to hold an AFSL for the funds management financial services it provides to eligible Australian users. This right is conditional upon the provider satisfying the preconditions in section 6(1) and the ongoing condition in section 7. The provider also has the right, under section 6(1)(a)(iv), to be asked for written consent to information sharing; the provider must give or vary that consent on ASIC’s or the overseas regulator’s request. The provider does not have an unfettered right to refuse; the obligation is to give or vary consent and take “all other practicable steps” to enable disclosure.

The provider also has the right to have the exemption apply without any requirement for a periodic renewal. The written confirmation is a one-off event unless the home jurisdiction changes. Under section 6(2), if the home jurisdiction changes, the provider has 30 days from the change to give a new written confirmation. Until that 30-day period expires, the exemption continues to apply based on the old confirmation. This grace period recognises that a change of home jurisdiction (e.g., moving a fund manager’s headquarters from London to Dublin) may not be immediately reflected in corporate documents.

There is no express right to withdraw the confirmation. Once given, the confirmation appears irrevocable - but practically, the provider could cease relying on the exemption by obtaining an AFSL or ceasing to provide funds management financial services. The instrument does not require the provider to notify ASIC if it stops relying on the exemption, though failure to maintain the agent for service would trigger a loss of exemption.

ASIC has the right under section 6(1)(a)(v) to direct a provider to give a written statement containing specific information about its financial services business in Australia. The provider must comply within the time specified. This is a potentially broad information-gathering power. There is no limit on the type of information ASIC can request, subject only to the requirement that it be “specific information in relation to the financial services business”. ASIC also has the right to request assistance under section 6(1)(a)(vi), and the provider must give such assistance as ASIC reasonably requests in relation to compliance with financial services laws and ASIC’s functions.

The instrument itself does not prescribe penalties for non-compliance. Its enforcement effect is indirect: if a provider fails to meet the conditions or the preconditions, the exemption ceases to apply, and the provider is then carrying on a financial services business in Australia without an AFSL. That is a criminal offence under subsection 911A(1) of the Corporations Act, carrying penalties including fines and imprisonment (currently up to five years imprisonment for individuals and fines up to 2,000 penalty units per offence under section 1311). Additionally, civil penalties apply: a person who contravenes subsection 911A(1) may be ordered to pay a civil penalty (currently up to $1.1 million for individuals and up to $11.1 million for bodies corporate). ASIC can also seek injunctions to restrain unlicensed conduct.

The key enforcement risk for a provider is that ASIC discovers it has breached the exemption conditions. For example, if the provider fails to have an agent for service for 11 consecutive business days, the exemption is lost retroactively from the day the agent gap began. Any services provided during that period would be unlicensed. Similarly, if the provider opens an Australian office (e.g., a representative office or a sales desk), it would no longer satisfy section 6(1)(b) and the exemption would be unavailable. The provider would need to either close the Australian place of business or obtain an AFSL.

The instrument also creates enforcement leverage through the overseas regulator channel. The provider must have an overseas regulator as a signatory to the IOSCO MMoU. If that regulator ceases to be a signatory - for example, if a jurisdiction withdraws from the MMoU - the provider would no longer satisfy section 6(1)(a)(iii) and the exemption would be unavailable. The provider would need to give a new written confirmation identifying a different home jurisdiction with a compliant regulator, or obtain an AFSL.

There is also a risk of ASIC issuing a written direction under section 6(1)(a)(v) that the provider cannot comply with (e.g., due to domestic law restrictions on disclosing client information). The provider agreed in advance to comply with any such direction. Failure to comply would mean the provider fails to maintain the conditions, again leading to loss of exemption. The instrument does not provide a carve-out for foreign blocking statutes, so there is a real tension: the provider may have agreed to something it cannot legally do. In practice, ASIC would likely exercise its direction power reasonably, but the risk exists.

ASIC can also take administrative action, such as issuing a public warning notice or banning a person from providing financial services, though those powers typically apply to licensees. For an exempt foreign provider, ASIC’s main tool is to direct the provider to stop relying on the exemption or to seek an injunction.

The instrument operates within the broader framework of the Corporations Act 2001, particularly Chapter 7 (financial services and markets). It provides an exemption from the licensing requirement in subsection 911A(1), but it does not exempt the provider from other provisions of the Act. The provider must still comply with the general conduct prohibitions in Part 7.10 (misleading or deceptive conduct in relation to financial products and services, market manipulation, insider trading), the financial services disclosure requirements (Part 7.7, Part 7.9) where they apply, and the client money and property rules (Part 7.8). However, some of those obligations apply only to AFS licensees. For example, the general obligations under section 912A (efficient, honest and fair services; adequate resources; risk management; etc.) apply only to licensees, so an exempt foreign provider is not subject to those. This is significant: the exempt provider does not need to have a dispute resolution system, professional indemnity insurance, or adequate financial resources as required of licensees. The eligible Australian user is expected to perform its own due diligence.

The instrument interacts with other ASIC instruments that provide licensing relief for foreign financial services providers. For example, ASIC Corporations (Foreign Financial Services Providers - Non-Funds Management Financial Services) Instrument 2021/510 (amended and now perhaps consolidated) provides a broader exemption for foreign providers dealing with wholesale clients, subject to different conditions (e.g., notification, but no requirement for an overseas regulator signatory). A provider offering both funds management and non-funds management services may need to rely on multiple instruments. Also, the Corporations Regulations 2001, regulation 7.6.02AA and 7.6.02AG provide class order relief for certain foreign providers. The instrument at hand is more specific and arguably more restrictive due to the condition about a signatory overseas regulator.

The definition of “eligible Australian user” intersects with the definitions of “wholesale client” under the Corporations Act. An eligible Australian user does not need to meet the wholesale client tests (e.g., the $500,000 product value or $2.5 million net assets tests). They are defined by their institutional nature. This means the exemption can apply even if the particular transaction would involve a retail client under the ordinary tests (e.g., a small super fund with $10 million net assets is still eligible). Conversely, a large individual investor with $20 million net assets who is not in any of the listed categories would not be an eligible Australian user and could not receive services under this exemption. That individual would still be a wholesale client under the Act, so they could receive services from a foreign provider under other exemptions (e.g., the professional investor exemption or the relevant provider exemption under reg 7.6.02AA). This instrument does not cover that scenario.

The instrument also interacts with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF). Foreign providers that are not AFS licensees may still be required to register with AUSTRAC if they provide financial services to Australian customers. The instrument does not address AML/CTF obligations; providers must assess their own obligations.

State and territory legislation on service of process is also relevant. The agent for service must be a natural person ordinarily resident in Australia or a company. Service on that agent is deemed service on the foreign provider. The agent’s details must be current; if the agent ceases to be authorised or changes address, the provider must notify ASIC. Failure to keep details current could nullify the service of process, but the instrument itself does not address the legal consequences for service; that is a matter of common law and the Corporations Act.

The instrument has been amended six times since its original registration on 10 March 2020. The original version (2020/199) set commencement at 1 April 2023. That original commencement was deferred multiple times: Instrument 2021/510 (registered 15 June 2021) amended section 2 to defer commencement to 1 April 2024. Instrument 2022/623 (registered 29 July 2022) further deferred to 1 April 2025. Instrument 2023/588 (registered 7 August 2023) deferred to 1 April 2026. Instrument 2024/497 (registered 31 July 2024) deferred to 1 April 2027. Finally, Instrument 2025/799 (registered 4 December 2025) confirmed commencement at 1 April 2027, without any further deferral. The history shows a pattern of annual postponements, each time moving the start date back by one year. This suggests significant industry pushback or unresolved policy issues around the scope of the exemption. The note at the end of the compilation indicates that the most recent amendment (2025/799) commenced on 5 December 2025, amending section 2 to set the commencement at 1 April 2027, so no further amendments are currently scheduled.

During this period, the instrument itself has not been substantially rewritten; only the commencement date has been amended. The definitions and operative provisions have remained unchanged since 2020. This is unusual for a legislative instrument that has been on the books for over five years without taking effect. It indicates that the instrument was designed as a temporary or trial measure, but the prolonged delay may reflect a change in government policy or a realisation that the exemption as drafted could have unintended consequences. Alternatively, it may simply reflect a desire to align commencement with other regulatory changes. The 1 April 2027 commencement is still two years away from the date of the latest amendment.

The amending instruments are purely procedural (amending the commencement date). No substantive amendments to the definitions, the exemption conditions, or the eligible Australian user list have been made. The instrument’s original structure is intact; the only changes are to section 2. The absence of substantive amendments suggests that the policy design has remained stable, but the implementation timeline has been stretched.

The source document contains no references to any litigation regarding this instrument. As of the date of compilation (5 December 2025), the instrument has not commenced, so it is unlikely to have been the subject of any court proceedings. No cases are cited in the instrument itself. The instrument is a legislative instrument made under subsection 926A(2) of the Corporations Act, which gives ASIC the power to exempt a class of persons from the licensing requirements. Any challenge to the instrument’s validity would likely be on administrative law grounds (e.g., whether ASIC exceeded its power under s 926A(2) because the instrument is not consistent with the Act’s objects). Given that the instrument has not yet commenced, a challenge is premature; affected parties would likely seek to influence ASIC or the government through consultation rather than litigation.

There is also no litigation regarding the agent for service condition or the written confirmation requirements. These are prescriptive conditions that do not appear to have been tested in court. The instrument’s interaction with section 911D has not been litigated specifically in the context of this exemption. However, the broader question of when a foreign provider is deemed to carry on a business in Australia under s 911D has been the subject of guidance and occasional disputes. The exemption is designed to provide certainty, but the lack of litigation history means there is no judicial interpretation of, for example, what constitutes a “place of business” in this jurisdiction for the purposes of section 6(1)(b), or what “all other practicable steps” means under section 6(1)(a)(iv). Practitioners should anticipate that ASIC will interpret these terms strictly.

Several traps in the instrument could cause a foreign provider to inadvertently lose the exemption. First, the no-place-of-business condition in section 6(1)(b) is absolute. A provider cannot have a place of business in Australia. This includes not just a registered office or a physical trading floor, but also any office, desk, or facility from which the provider conducts business activities. A remote working arrangement by an individual does not necessarily constitute the provider’s place of business, but if the provider leases or owns property in Australia, or has a representative office that performs substantive business functions, the exemption is lost. This is especially tricky for providers with existing Australian subsidiaries or branch offices that provide services other than funds management; they would not be eligible.

Second, the agent for service condition (section 7) requires that the provider not be without an agent for 10 consecutive business days. This is not just a continuous appointment; if the agent resigns or dies, the provider has 10 business days to appoint a new one. The notification requirement operates independently: the provider must notify ASIC within 10 business days of any change. The 10-business-day clock for notification runs from the event (ceasing, commencing, or change of address). It is possible to remain in compliance with the agent condition if a new agent is appointed within 10 business days, but the notification to ASIC must also be within that period. Failure to notify within 10 business days would breach the condition even if the agent is actually appointed.

Third, the written confirmation requirement under section 6(1)(a) has a hidden trap regarding home jurisdiction. The provider must identify its home jurisdiction and confirm that it would not contravene home jurisdiction laws by providing services. If the provider’s home jurisdiction changes, it has only 30 days to provide a new written confirmation (section 6(2)). The 30 days run from the day the home jurisdiction changes, not from when the provider becomes aware of the change. A change could occur, for example, if the provider moves its headquarters or is acquired by an entity in another jurisdiction. The provider must monitor its principal place of business and incorporation constantly.

Fourth, the definition of “offshore fund” requires that the fund was established outside Australia and is not operated in Australia. If an offshore fund begins to be operated in Australia (e.g., through an Australian investment manager), financial products in that fund cease to be offshore fund financial products. The exemption would no longer apply to services related to that fund. Similarly, if the fund becomes registered in Australia, it may no longer qualify.

Fifth, the eligible Australian user category “body regulated by APRA” excludes trustees of certain superannuation funds (as listed). But APRA also regulates other entities such as friendly societies and private health insurers. Those are eligible. However, the category “exempt public authority other than a local Council” means local councils are explicitly ineligible. This is a specific carve-out; if a foreign provider services a local Council’s super fund or investment portfolio, the exemption does not apply.

Sixth, the definition of funds management financial service under paragraph (b) refers to “dealing in financial products” and “advice” to an eligible Australian user under a portfolio management services mandate. But the custodial/depositary service under paragraph (c) is also under such a mandate. The note clarifies that different persons may provide the services in (b) and (c). So a foreign provider could provide portfolio management services while another entity provides custody. The exemption applies separately to each entity. But if the entity providing custody does not also satisfy the conditions (e.g., it has an Australian office), it cannot rely on the exemption.

Seventh, the exemption only covers the person that “is carrying on a financial services business in this jurisdiction only because of the operation of section 911D of the Act in relation to funds management financial services”. If that person also carries on a financial services business in Australia through other means (e.g., an Australian-incorporated subsidiary that is an AFS licensee), the parent may still be carrying on business in Australia for other reasons. The exemption cannot be used to cover the parent’s own activities if they have another nexus.

Eighth, the condition in section 6(1)(a)(iv) regarding consent to information sharing is broad. The provider must give or vary written consent to enable and assist the overseas regulator to disclose to ASIC “any information or document that the overseas regulator or ASIC has that relates to the person”. This could include information about non-Australian clients or proprietary trading strategies that the provider may wish to keep confidential. There is no carve-out for legal professional privilege or commercial sensitivity. The provider must take “all other practicable steps” to assist. This is a significant concession for a foreign provider; it may conflict with home jurisdiction data protection laws.

A foreign provider intending to rely on this exemption must take several affirmative steps before it begins providing funds management financial services to eligible Australian users. Step one is to confirm that its Australian business will be limited to the defined funds management financial services as provided to eligible Australian users. If the provider will also provide other financial services to Australian clients (e.g., dealing in Australian equities, advising retail clients, or providing margin lending), it needs separate licensing relief or an AFSL for those activities.

Step two is to ensure it has no place of business in Australia. This requires an audit of any Australian premises, including leased offices, co-working spaces, or any place where the provider conducts business activities. A virtual office with a physical address may count as a place of business if it is used for receiving mail or meeting clients. The safest approach is to have no physical presence at all, and to conduct all communication with eligible Australian users remotely.

Step three is to appoint an agent for service. The agent must be a natural person ordinarily resident in Australia or a company, with an Australian address. The provider must provide the agent’s name and address to ASIC in writing for the purposes of the instrument. The agent must be authorised to accept service of process from ASIC and from any person referred to in subsection 659B(1) of the Act. The provider should enter into a formal agency agreement and ensure the agent is willing and able to accept service promptly. The provider must also maintain the agent’s details continuously; if the agent changes, the provider must notify ASIC within 10 business days.

Step four is to prepare and submit the written confirmation to ASIC. The confirmation must: (i) state that the provider intends to rely on the exemption; (ii) identify the home jurisdiction and confirm that the provider would not contravene its home jurisdiction laws by providing the services; (iii) identify the overseas regulator in that home jurisdiction and confirm it is a signatory to the IOSCO MMoU; (iv) agree to give or vary written consent to information sharing on request; (v) agree to comply with any written direction from ASIC to provide information; (vi) agree to give reasonable assistance to ASIC; and (vii) include the current agent for service details. The confirmation must be given to ASIC before the provider can rely on the exemption. The instrument does not specify a form, but the confirmation should be in writing and clearly refer to the instrument. ASIC may request additional information.

Step five is to monitor ongoing compliance. The provider must ensure that it never goes without an agent for more than 10 consecutive business days. It should have a process for immediately appointing a new agent if the current one ceases. The provider must also monitor its home jurisdiction - if it changes (e.g., due to a corporate restructuring or moving headquarters), it has 30 days to give a new written confirmation. If the provider’s overseas regulator ceases to be a signatory to the IOSCO MMoU, the exemption becomes unavailable; the provider would need to find a new home jurisdiction that meets the criteria or obtain an AFSL. The provider must also ensure that it does not inadvertently open a place of business in Australia, even temporarily.

Step six is to respond promptly to any ASIC direction or request for assistance. The provider has already agreed to comply, so it must have internal procedures for handling such requests. Any failure to comply could jeopardise the exemption.

Step seven is to keep records. Although the instrument does not impose record-keeping requirements, the provider should document its compliance with the conditions, including copies of the written confirmation, agent agreements, notifications to ASIC, and any communications with ASIC or the overseas regulator. These records will be crucial if ASIC investigates the provider’s reliance on the exemption.

Step eight is to review the list of eligible Australian users before each service engagement. The provider must verify that the counterparty falls within one of the defined categories. This may require collecting evidence of the counterparty’s net assets (for superannuation funds), its APRA regulation, or its status as a responsible entity or exempt public authority. If the counterparty is a local council, the exemption does not apply, so the provider must either obtain an AFSL, rely on another exemption, or decline the business. The provider should also ensure that the financial services provided strictly fall within the definition of funds management financial service - for example, if the provider deals in Australian managed investment scheme interests outside a portfolio management mandate, that service is not covered.

Finally, the provider should monitor changes to the instrument. Given the history of multiple commencement date amendments and the possibility of further substantive changes before 1 April 2027, the provider should periodically check the Federal Register of Legislation for any amending instruments. The exemption is not permanent; it could be modified or revoked. If ASIC amends the instrument after commencement, existing reliance may be grandfathered or the provider may need to adjust its arrangements.