Separation of funds management and securSeparation of funds management and securitisation schemes

Separation of funds management and securitisation schemes

10. Funds management and securitisation schemes should stand clearly separate from any ADI involved in the schemes, and there should be clear limits governing the extent of that involvement. Any undertakings given by an ADI to a SPV and/or investors should be subject to the ADI’s usual approval and control processes. Such undertakings should be expressed clearly in the legal documentation of the scheme, and must be fixed as to time and amount.

11. An ADI should not:

(a) have any ownership or beneficial interest (except as provided for in paragraph 12) in a SPV;

(b) include the word “bank”, “building society”, “credit union”, “authorised deposit-taking institution”, or “ADI” in the name of the SPV; or

(c) have any of its directors, officers or employees on the board of a SPV unless the board is made up of at least four members. The ADI may be represented by one director in a board of four to six members and by no more than two directors in a board with seven or more members.

12. Requirements (a) and (c) in paragraph 11 do not apply to:

(a) an entity which is involved in the capacity of pure “trustee” or “custodian”;

(b) a life insurance company and its statutory funds regulated by APRA or equivalent regulatory authorities overseas;

(c) an “approved trustee” or “custodian” established under provisions of the Superannuation Industry (Supervision) Act 1993 or like legislation overseas;

(d) “common trust funds” established pursuant to legislation and complying with Australian Securities and Investments Commission Policy Statement 32; or

(e) a “responsible entity” established under the Managed Investments Act 1998, or similar entities established under like statutory provisions overseas.

13. An ADI, in its capacity as an authorised deposit-taking institution, should not act in any circumstances as a manager, trustee, responsible entity or any similar role. Any such involvement should be conducted through a stand-alone subsidiary or other associate that is not itself an ADI. Where an ADI’s subsidiary or associate acts in such a role, the ADI itself should ensure that a clear distinction exists between itself and the subsidiary or associate concerned.