Acquisitions under direction from clientAcquisitions under direction from client

Acquisitions under direction from client

(8) The responsible entity of an IDPS-like scheme must not, and must ensure that any custodian acting on its behalf does not, acquire accessible securities or accessible financial products under a direction of a member as part of the scheme unless: (a) in relation to acquisitions of accessible securities: (i) for an acquisition of shares resulting from a CSF offer—subsection (8H) is satisfied; and (ii) otherwise—subsection (8A) or (8E) is satisfied; and (b) in relation to acquisitions of accessible financial products: (i) subsection (8B), (8C), (8D), (8E) or (8F) is satisfied; and (ii) subsection (8G) is satisfied. (8A) This subsection is satisfied if: (a) both of the following are satisfied: (i) the responsible entity reasonably believes that the member has been given a copy of the disclosure document for the accessible securities that would have been required had the accessible securities been offered to the member directly at the time of the acquisition of the accessible securities; (ii) the responsible entity has no reason to believe that the disclosure document is defective as if it were prepared at that time; or (b) the responsible entity reasonably believes that the accessible securities could lawfully have been offered and issued or sold, as the case may be, to the member directly without the member being required to be given a disclosure document other than because of subsection 708(1). (8B) This subsection is satisfied if: (a) the responsible entity reasonably believes that the member has been given a copy of the Product Disclosure Statement for the accessible financial product that would have been required had the financial product been offered to the member directly at the time of the acquisition of the financial product; and (b) the responsible entity has no reason to believe the Product Disclosure Statement is defective as if it were prepared at the time of the acquisition. (8C) This subsection is satisfied if: (a) the responsible entity reasonably believes that the accessible financial product could lawfully have been offered and issued or sold, as the case may be, to the member directly without the member being given a Product Disclosure Statement other than because of section 1012E; and (b) the responsible entity has no reason to believe that a Product Disclosure Statement would have been required to be given to the member if all other holdings of the financial product in custodial arrangements had been issued to the clients (as defined in section 1012IA) of those arrangements.

Note: Under section 601ED, a managed investment scheme does not generally need to be registered if it has no more than 20 members. If interests held through custodial arrangements such as IDPSs, IDPS-like schemes and nominee and custody services had been acquired directly, the scheme may have required registration as it may have had more than 20 members.

(8D) This subsection is satisfied if: (a) the member already holds an accessible financial product of the same kind through the scheme; and (b) the responsible entity has given the member a Product Disclosure Statement for a financial product of the same kind; and (c) the responsible entity reasonably believes that the member has access to, and knows that they have access to, a Product Disclosure Statement for the financial product; and (d) the Product Disclosure Statement the member has access to is the most current in use or does not differ from the most current in use in a way that is materially adverse for the member; and (e) the responsible entity has no reason to believe the Product Disclosure Statement the member has access to is defective as if it were prepared at the time of the acquisition. (8E) This subsection is satisfied if the acquisition is made under a distribution reinvestment plan in relation to a member and the member already has an existing holding of an accessible financial product of the same kind or accessible securities in the same class through the scheme. (8F) This subsection is satisfied if the acquisition is made under a regular saving acquisition in relation to a member and: (a) the member already has an existing holding of an accessible financial product of the same kind through the scheme; and (b) the responsible entity has complied with its agreement with the member in relation to the regular savings plan to give any missing documents. (8G) This subsection is satisfied if the responsible entity reasonably believes that the issuer or seller of the accessible financial products has a dispute resolution system that satisfies either subsection 912A(2) or 1017G(2) and which covers complaints against the issuer or seller by each member of the IDPS-like scheme who: (a) holds through the IDPS-like scheme an accessible financial product issued or sold by the issuer or seller; and (b) if the issuer or seller had issued or sold the accessible financial product the subject of the direction to the member directly—would have acquired the product as a retail client; where the complaints are made in connection with an accessible financial product issued or sold by the issuer or seller that is held through the IDPS-like scheme. (8H) This subsection is satisfied if the responsible entity reasonably believes that: (a) the member: (i) has accessed the platform of a CSF intermediary containing the CSF offer document for the CSF offer and the responsible entity has no reason to believe the document is defective as at the time of the acquisition of the shares; and (ii) has completed the acknowledgement that would be required under paragraph 738ZA(3)(b) if the member had applied as a retail client; and (iii) was able to use the relevant communication facility for the CSF offer provided under subsection 738ZA(5); and (iv) was able to withdraw the direction within 5 business days after it was made; and (v) has not been provided with financial assistance in relation to the CSF offer by any of the following: (A) a person referred to in subsection 738ZE(1); or (B) the responsible entity; or (C) an associate of the responsible entity that is not an Australian ADI; and (vi) has not in total paid for, or become liable to pay for, or given directions under an IDPS, an IDPS-like scheme or a nominee and custody service for the acquisition of, shares under a CSF offer of the company making the CSF offer that together exceed the cap on investment in paragraph 738ZC(1)(b); or (b) the member would have acquired the shares as a wholesale client if the member had acquired the shares directly under the CSF offer.