The instrument’s operative legal concepts are set out by cross‑reference to the Act and the FSS Act and by the conditions attached to the exemption. Those concepts shape who qualifies for the exemption and when it applies.

Key defined and referenced concepts:

• “Modifiable provision” (Schedule, section 4): the instrument relies on the Act’s concept of a modifiable provision (the instrument identifies sections 29HA and 29JCB as the particular modifiable provisions from which the class is exempt); the Act’s definition in s 327 is invoked but not reproduced. Practitioners must therefore consult s 327 of the Act to understand the statutory category that permits APRA exemptions and how those modifiable provisions ordinarily operate.

• “RSE licensee” and “controlling stake” (Schedule, section 4): those meanings are given by subsection 10(1) of the Act. The instrument is therefore tied to the statutory concepts of registrable superannuation entities and the statutory mechanics for what amounts to a controlling stake under the Act.

• “Associate”, “stake”, “direct control interest”, and “constituent document” (Schedule, section 4): each is defined by reference to the FSS Act (various clauses of Schedule 1). The instrument repeatedly conditions eligibility upon these concepts, for example the aggregation rules in section 7(b)(ii) and the limitation that associates considered under the aggregation may be associates “only by operation of clause 4(1)(e) of Schedule 1 of the FSS Act” (section 7(c)). That narrow reference to a single paragraph of the FSS Act definition of associate is central to the instrument’s scope.

• “Financial benefit” (Schedule, section 4): the instrument defines this narrowly within the Schedule to mean “a benefit arising directly from the acquisition or holding of a share”, but expressly excludes “a payment made to the person in respect of performance of their duties as a director of the RSE licensee.” That carve‑out clarifies that director remuneration is not treated as a disqualifying “financial benefit” for the purposes of the exemption.

• Temporal condition: the exemption only applies where “the person acquires the controlling stake in the RSE licensee on or after the date of commencement of this instrument” (section 7(d)). That creates a timing gate; acquisitions prior to commencement are outside the instrument’s scope.

• Post‑office transfer or forfeiture obligation: upon ceasing to be a director, the person “must as soon as practicable … transfer or forfeit the person’s shareholding … subject to the terms of the RSE licensee’s constituent document” (section 7(f)). This condition ties future disposition of shares to constituent document provisions and uses the flexible standard “as soon as practicable”.

The instrument therefore uses a combination of: (a) numerical caps and aggregation rules (direct control interest 15% cap; stake >15% only via aggregation with certain associates); (b) narrow definitions (associate only by clause 4(1)(e)); (c) temporal gates (acquisition on or after commencement); and (d) behavioural requirements (no direct financial benefit; divestment/forfeiture on ceasing to be director). Each of these is a legal trigger or boundary for the exemption.

For a practitioner, the practical upshot of these concepts is that the exemption is not a blanket permission for directors to hold material shareholdings in RSE licensees. It instead creates a narrowly described pathway under which a director or nominated director can both sit on the board and, subject to tight conditions, hold shareholdings that might aggregate to a controlling stake without complying with the two named provisions of the Act. To determine whether the pathway is available in any given case, a lawyer will need to consult the Act and the FSS Act for the precise statutory definitions referenced by the instrument.

The instrument defines its beneficiaries explicitly in its Schedule. Section 5 sets out the class of persons to whom the instrument applies:

• a person nominated for appointment as a director of an RSE licensee in accordance with the RSE licensee’s constituent document and subsequently appointed as a director;
• a director of an RSE licensee; and
• a former director of the RSE licensee.

That phrasing includes persons who are in the appointment pipeline (nominees who are later appointed), persons who currently occupy a directorship of an RSE licensee, and persons who have been directors in the past. The inclusion of “former director” is consequential, because one of the instrument’s conditions (section 7(f)) obliges a person who ceases to be a director to transfer or forfeit their shareholding as soon as practicable, under the terms of the RSE licensee’s constituent document. Thus the instrument both covers holdings while a person is a director and sets a rule for disposal after they cease office.

Which entities are affected: the instrument operates in relation to RSE licensees, a statutory category defined by subsection 10(1) of the Act (Schedule, section 4). Practitioners should treat the instrument as operating at the intersection of governance (board membership), shareholdings in RSE licensees, and statutory shareholding rules that are cross‑referenced to the Financial Sector (Shareholdings) Act (FSS Act). The instrument therefore affects:

• individual directors (and nominees and former directors) who hold, or propose to acquire, shareholdings in RSE licensees;
• RSE licensees and their constituent documents, because the instrument references the constituent document for appointment processes and for share transfer/forfeiture mechanics; and
• associated persons, in the narrow sense used by the FSS Act and restated in the instrument (section 7(b)(ii)-(c)), because aggregation of associates’ direct control interests can affect whether the stake exceeds 15%.

Who decides eligibility: APRA, through its delegated power under subsection 328(1) of the Act, made the exemption (Schedule, section 3). The instrument itself is a broad class exemption rather than an individual authorisation, but it is conditional. Although the instrument does not specify an administrative process to be followed by APRA for individual approvals, its scope is determined by factual circumstances (ownership percentages, timing of acquisition, identity and characterisation of associates) that will require documentary verification by affected persons and likely scrutiny by APRA if questions arise.

What it does not directly affect: the instrument does not amend the Act itself or change other statutory duties or prohibitions except by creating a statutory exemption from sections 29HA and 29JCB for the named class, subject to conditions. Because the instrument refers out to other statutory instruments for several key terms, persons whose positions intersect with corporate law, superannuation governance, or statutory shareholding rules will need to check those instruments and the constituent document of the relevant RSE licensee to determine precise consequences.

Finally, the instrument’s narrow definition of “financial benefit” (Schedule, section 4) and the explicit exclusion of director remuneration means that ordinary director pay does not itself disqualify a person from the exemption. That drafting choice directly affects remuneration design and the assessment of whether a person is “entitled to any financial benefit directly arising from the person’s shareholding” (section 7(e)).

The instrument creates rights (an exemption from sections 29HA and 29JCB) and imposes duties and conditions for persons within the covered class. All material duties and rights arise from the Schedule and the cross‑references in it.

Rights created:

• Conditional exemption: persons in the class (Schedule, section 5) gain an exemption from compliance with sections 29HA and 29JCB of the Act (Schedule, section 6), but only if all conditions in Schedule, section 7 are met. The right is therefore contingent and statutory.

Duties, conditions and constraints:

• Direct control interest cap: a person must hold a direct control interest in the RSE licensee at a particular time of 15% or less (Schedule, section 7(a)). That is a numeric constraint on the person’s direct control interest. The instrument references the definition of “direct control interest” as given in clause 11 of Schedule 1 of the FSS Act (Schedule, section 4), so determining whether a person meets this duty requires applying that external definition.

• Aggregation rule for stakes greater than 15%: a person may hold a stake of more than 15% only where the over‑15% stake arises solely by aggregating the direct control interest held by the person and the direct control interests held by the person’s associates (Schedule, section 7(b)). The instrument therefore permits a stake to exceed 15% if it is the product of aggregation with associates’ holdings, but imposes a further limitation on who counts as an associate.

• Narrow associate requirement: the associates whose interests can be aggregated are limited to those who are associates only by operation of clause 4(1)(e) of Schedule 1 of the FSS Act and are a director of the RSE licensee (Schedule, section 7(c)). That is a material restriction: only associates satisfying the specific sub‑paragraph of the FSS Act definition, and who are also directors, may be included in the aggregation calculation.

• Timing requirement for acquiring controlling stake: the person must acquire the controlling stake in the RSE licensee on or after commencement of the instrument (Schedule, section 7(d)). The effect is that prior acquisitions are excluded.

• Prohibition on entitlement to financial benefit: the person must not be entitled to any financial benefit directly arising from the person’s shareholding in the RSE licensee (Schedule, section 7(e)). The Schedule defines “financial benefit” narrowly and separately notes that payments in respect of director duties are not treated as financial benefit for this purpose (Schedule, section 4).

• Post‑office transfer/forfeiture obligation: as soon as practicable after ceasing to be a director, the person must transfer or forfeit the shareholding subject to the terms of the constituent document (Schedule, section 7(f)). That duty ties the timing and method of disposition to both the statutory standard “as soon as practicable” and to the contractual or constitutional limits in the RSE licensee’s constituent document.

Practical contractual and governance implications:

• Board appointments: because the class includes nominees who are subsequently appointed in accordance with the constituent document (Schedule, section 5(a)), RSE licensees and their nomination processes will need to consider the interaction between nomination/appointment, shareholding, and the exemption conditions. The constituent document plays a dual role: governing appointment and governing the mechanics of transfer or forfeiture on exit.

• Documentation and disclosure: persons claiming the exemption will need contemporaneous records proving direct control interest percentages, the identity and qualifying status of associates, timing of acquisitions, absence of direct financial benefits from shareholding, and the constituent document provisions that permit or effect transfer or forfeiture. The Schedule sets these elements as conditions, so they function as duties to be demonstrable.

• Interaction with remuneration: the Schedule’s explicit carve‑out for director payments in the definition of “financial benefit” (section 4) preserves ordinary director remuneration from being a disqualifying event. Nevertheless, other material benefits directly arising from the acquisition or holding of share(s) (as captured by the Schedule’s definition) would breach a condition.

Limitations and enforcement framework:

• The instrument does not itself state the consequences of breach (for example, whether the exemption is voided, whether other sanctions follow). It does specify that the conditions are set under s 330(2) of the Act (Schedule, section 7), so the statutory framework in the Act governs conditions and likely consequences. Practitioners should therefore read the Act’s provisions on conditions and the legal effect of contravening conditions to understand enforcement.

Overall, the instrument grants a specific, conditional right to be relieved from two provisions of the Act, matched with a package of duties and constraints focused on ownership percentages, aggregation rules, temporal gates, benefit exclusions and exit divestment mechanics.

The instrument itself does not introduce new penalties nor does it set out an administrative enforcement regime within its text. It is an exemption instrument made under subsection 328(1) of the Act and its conditions are specified under subsection 330(2) of the Act (Schedule, sections 3 and 7). The Schedule does not reproduce or specify the consequences of failing to meet those conditions; it simply states the conditions by reference to the statutory power to impose conditions (Schedule, section 7). Therefore, any penalty, sanction or remedial step would arise from the Act’s general enforcement regime and the legal effect of conditions imposed under the Act, not from the instrument itself.

What the instrument does say, and what that implies:

• Conditions under s 330(2): the instrument explicitly states the conditions are “specified under subsection 330(2) of the Act” (Schedule, section 7). That demonstrates that APRA is relying on the Act’s power to impose conditions on exemptions. The Act, via s 330(2), is the legal basis for the conditional character of this instrument; therefore enquiries about enforcement and penalties must look to the Act’s provisions concerning breach of conditions, revocation of exemptions, or other supervisory powers. The instrument does not reproduce those Act provisions.

• No independent sanctioning text: unlike some statutory instruments that create their own penalties for contravention, this instrument contains no express penalty provisions, fixed civil penalties, or criminal sanctions. It also does not state an administrative process for APRA to monitor compliance or for persons to apply for or certify their eligibility for the exemption.

• Implied loss of exemption on breach: by drafting the exemption as conditional under s 330(2), the instrument implies that failure to meet a condition will mean the person is no longer within the class of persons enjoying the exemption (because the exemption applies to persons only if the conditions are met). But the instrument does not expressly say whether the exemption is void ab initio if conditions are not met, whether the person must divest immediately, or whether APRA may take other regulatory action. Those consequences must be determined by reference to the Act.

• Administrative oversight: the instrument names APRA and the delegate who made it, suggesting that APRA is the relevant prudential supervisor. APRA will therefore be the natural enforcement authority; however, this instrument contains no procedural or evidentiary rules about how APRA will administer compliance or investigate breaches.

Practical steps for affected persons to manage enforcement risk:

• Treat the conditions as enforceable compliance obligations. Maintain records demonstrating the 15% direct control interest cap, the calculation and basis for any aggregation with associates, the timing of acquisition relative to commencement, the absence of a financial benefit as defined in the Schedule, and the constituent document provisions for transfer/forfeiture.

• Where the constituent document constrains transfer/forfeiture options, obtain legal advice on whether those constituent document processes meet the “as soon as practicable” requirement in section 7(f), as the instrument conditions disposal on the terms of the constituent document.

• Expect to consult with APRA if there is any question about whether an associate qualifies under clause 4(1)(e) of Schedule 1 of the FSS Act, because the instrument limits aggregation to associates who meet that narrow statutory condition and who are directors of the RSE licensee (section 7(c)).

Because the instrument does not itself prescribe enforcement mechanisms, practitioners should read the Act to determine the legal effects of breach of conditions, revocation of exemptions, and APRA’s powers to take remedial action. The instrument functions as a conditional statutory permission, and the Act’s supervisory framework governs the legal consequences that follow from non‑compliance.

The Schedule repeatedly cross‑refers to the Act and the Financial Sector (Shareholdings) Act 1998 (FSS Act) for definitions and statutory concepts. The instrument therefore sits as a narrow, conditional modification of the operation of the Act in relation to particular sections and persons and interacts with other statutory instruments and constituent documents in several specific ways.

Direct statutory cross‑references in the Schedule:

• Power and conditions: the instrument is made under subsection 328(1) of the Act and imposes conditions under subsection 330(2) of the Act (Schedule, sections 3 and 7). Those subsections in the Act provide the legal authority both to grant exemptions from modifiable provisions and to attach conditions to those exemptions. Any reading of the instrument’s legal effect requires consultation of those Act provisions to understand APRA’s authority, standard conditions that can be imposed, and the statutory consequences of breach.

• Modifiable provisions and specific sections: the instrument exempts the identified class from sections 29HA and 29JCB of the Act (Schedule, section 6). The instrument does not reproduce those sections. To understand the functional effect of the exemption (what duties or prohibitions are being lifted), a reader must consult sections 29HA and 29JCB of the Act. The Schedule also references s 327 of the Act for the definition of “modifiable provision” (Schedule, section 4), which frames the category of provisions ordinarily capable of being modified by instrument.

Dependencies on the FSS Act:

• The instrument imports multiple definitions from the FSS Act (Schedule, section 4): “associate” (clause 4 of Schedule 1), “constituent document” (clause 2 of Schedule 1), “direct control interest” (clause 11 of Schedule 1), and “stake” (clause 10 of Schedule 1). Moreover, section 7(c) of the instrument requires that the associates relied upon for aggregation be associates only by operation of clause 4(1)(e) of Schedule 1 of the FSS Act. That places the instrument in direct textual dependence on particular sub‑clauses of the FSS Act’s Schedule 1. Practitioners therefore must consult the FSS Act to determine who qualifies as an associate, how stakes and direct control interests are calculated, and what clause 4(1)(e) covers.

Constituent document and internal governance:

• The instrument repeatedly refers to the RSE licensee’s constituent document: nomination and appointment must be in accordance with the constituent document (Schedule, section 5(a)), and the post‑office transfer or forfeiture of shares must be “subject to the terms of the RSE licensee’s constituent document” (Schedule, section 7(f)). That means the instrument interacts with the internal constitutional or constituent governance arrangements of the RSE licensee. Where constituent documents restrict transfer or impose procedural or timing requirements, those document provisions determine whether an affected person can comply with the “as soon as practicable” disposal condition.

Potential overlaps with company law and contractual obligations:

• Although the instrument does not explicitly reference the Corporations Act 2001 (Cth) or other corporate law, the matters it covers,directors, share transfers, and constituent documents,typically intersect with corporate and trust law obligations in practice. The Schedule’s cross‑references require coordinative analysis with the RSE licensee’s corporate governance documents when determining whether a director’s shareholding and its disposal on cessation of office comply with both the instrument’s conditions and other legal obligations (for example, pre‑emptive transfer provisions, restrictions on share transfers, or trust‑law duties). The instrument’s text, however, does not specify how to resolve conflicts between its conditions and other statutory obligations; those issues will be resolved by applying ordinary legal principles and by examining the Act and FSS Act.

Limitations on scope:

• Temporal limitation: because the exemption applies only where the person “acquires the controlling stake … on or after the date of commencement of this instrument” (Schedule, section 7(d)), the instrument intentionally excludes pre‑existing controlling stakes. That temporal gate interacts with any statutory or contractual obligations that arose before the instrument’s commencement and with shareholding records that pre‑date the instrument.

• Narrow associate rule: by limiting aggregation to associates who are associates “only by operation of clause 4(1)(e) … and are a director of the RSE licensee” (Schedule, section 7(c)), the instrument narrows the pool of associative relationships that may be taken into account for aggregation. Determining whether an associate meets that precise FSS Act sub‑paragraph therefore requires interactional analysis between the instrument and clause 4(1)(e) of the FSS Act.

In sum, the instrument is not standalone. Its legal effect can be fully understood only by reading it alongside: (a) the named sections of the Act (29HA, 29JCB, and the procedural and definitional provisions such as ss 10(1), 327, 328(1), 330(2)); (b) the FSS Act Schedule 1 clauses referenced; and (c) the RSE licensee’s constituent document. Practitioners should therefore treat the instrument as a conditional statutory exception embedded within a network of statutory rules and corporate governance documents.

The instrument itself reproduces a single enactment block titled “Superannuation Industry (Supervision) Act exemption No. 1 of 2023.” The Schedule provides the essential metadata for commencement and authority:

• Name and identifier: Superannuation Industry (Supervision) Act exemption No. 1 of 2023 (Schedule, section 1).
• Commencement: the instrument commences on the day after it is registered on the Federal Register of Legislation (Schedule, section 2).
• Authority: made under subsection 328(1) of the Act (Schedule, section 3).
• Date and signature: the instrument is dated 4 August 2023 and signed by Clare Gibney, Executive Director, Policy & Advice Division, acting as delegate of APRA.

Within the text provided there are duplications of the Schedule content (the instrument appears to be reproduced multiple times). That repetition does not alter the operative effect of the instrument; it is the same instrument repeated in the document. The instrument contains no separate amendment clauses, no transitional provisions other than the commencement timing, and no sunset provision. The Schedule does not record prior instruments or prior versions of this exemption; it is presented as a standalone instrument.

Because the instrument is an exercise of the statutory power under s 328(1) of the Act, future amendments or revocations would be governed by the Act’s procedures for making, varying or revoking exemptions and for APRA to exercise its delegations. The Schedule does not itself specify a mechanism for amendment or revocation, nor a review period. It is therefore silent on whether APRA intends to periodically review the exemption, or whether the instrument will be replaced or revoked in future.

For practical purposes, anyone relying on the exemption should treat the instrument as current from the day after registration and should monitor the Federal Register of Legislation and APRA’s publications for any subsequent instruments that might amend, supersede, or revoke this instrument. The Schedule explicitly states the register may be accessed at www.legislation.gov.au (Schedule, section 2), signalling that the authoritative version and any amendments will be recorded on that official register.

Because the instrument relies on definitions and conditional powers in other statutes (the Act and the FSS Act), amendments to those statutes or to Schedule 1 of the FSS Act could indirectly affect the practical operation of this exemption. The Schedule contains no express savings or transitional provisions to deal with future legislative amendments that alter the underlying definitions; therefore, any such changes would require legal analysis to determine their downstream effect on persons relying on this instrument.

In short: the instrument is a single 2023 instrument with no internal amendment history recorded in the text provided. Its status may change only through subsequent instruments or amendments recorded on the Federal Register of Legislation and through legislative change to the statutes it references.

The text of the instrument contains no record of litigation. It is a statutory instrument made by APRA’s delegate and is presented as an administrative exemption; the Schedule does not cite any judicial decisions nor any pending litigation. There are no cases named in the instrument, nor is there any internal indication that the exemption has been contested or the subject of court proceedings.

Because the instrument is an administrative act, any judicial review challenges or statutory litigation would be conducted under the general law of administrative law or under the Act’s specific dispute resolution and enforcement frameworks. The Schedule does not provide any procedural pathway for challenging the exemption itself or its application. It likewise does not provide interlocutory provisions or transitional arrangements that might have attracted litigation.

Practical implication: from the material provided, there is no litigation history to cite. Practitioners who need to understand the legal durability or contestability of the exemption should:

• monitor federal court and administrative law decisions for any challenges to APRA’s exercise of its exemption power under s 328(1) or to the conditions imposed under s 330(2) of the Act; and
• consider administrative law remedies (for example, merits review where available, or judicial review) if an individual or entity believes APRA has applied the exemption incorrectly or has failed to apply it when appropriate.

Absent external case law, interpretation of ambiguous terms in the instrument (for example, “as soon as practicable”, or the precise coverage of clause 4(1)(e) of the FSS Act) remains subject to statutory construction principles and, if litigated, judicial interpretation. For now, the instrument stands without recorded judicial testing in the text provided.

The instrument is concise and technical. Several drafting choices and cross‑references create potential pitfalls for practitioners and affected persons. The following are concrete issues and traps that the Schedule itself creates; each is grounded in the instrument’s wording and the cross‑references it contains.

1. Dependency on external definitions, especially in the FSS Act: the instrument imports several definitions from Schedule 1 of the FSS Act (associate, direct control interest, stake, constituent document) (Schedule, section 4). The Schedule’s substantive conditions hinge on how those definitions operate. A practitioner who relies only on the instrument without reading the referenced clauses risks miscalculating whether a person qualifies or whether associates should be aggregated for stake calculations. The instrument’s narrow reliance on clause 4(1)(e) for associate status (Schedule, section 7(c)) is particularly technical; you must read clause 4(1)(e) itself to know which relationships are captured.

2. The “associate only by operation of clause 4(1)(e)” restriction is tight: section 7(c) requires that an associate be an associate “only by operation of clause 4(1)(e) of Schedule 1 of the FSS Act and are a director of the RSE licensee.” That double requirement (a specified statutory ground for association and director status) may exclude many commonly understood associative relationships. Mis‑identifying associates could lead to incorrect aggregation of direct control interests.

3. “Direct control interest” versus “stake”: the instrument treats a 15% limit on direct control interest (section 7(a)) while permitting a stake >15% only via aggregation of direct control interests (section 7(b)). The technical difference between “direct control interest” and “stake” is defined in the FSS Act (Schedule, section 4). Calculations that confuse the two could produce incorrect compliance outcomes.

4. Timing gate: the exemption applies only where the person acquires the controlling stake on or after the instrument’s commencement (section 7(d)). A controlling stake acquired earlier is not covered. This creates a line in time that must be evidenced by contemporaneous transaction documents and registers. Ambiguity over the precise moment of “acquisition” could be contested.

5. “No entitlement to any financial benefit” is narrowly defined but materially important: the Schedule defines “financial benefit” as “a benefit arising directly from the acquisition or holding of a share” but explicitly excludes director remuneration (Schedule, section 4). That exclusion means ordinary director pay does not disqualify a person, but other benefit forms (dividends, distributions linked to shareholding, share purchase rights that confer economic gain) could. The instrument does not define “directly arising” more precisely and disputes could arise over the boundary between director remuneration and benefits tied to shareholding.

6. “As soon as practicable” is ambiguous: the post‑office transfer or forfeiture duty (section 7(f)) requires transfer or forfeiture “as soon as practicable … subject to the terms of the RSE licensee’s constituent document.” Both elements create uncertainty. Constituent documents may impose notice periods, pre‑emptive transfer processes, or other constraints that delay transfer; whether those procedural steps meet “as soon as practicable” is a fact‑sensitive legal question. Practitioners should obtain written confirmation from constituent document trustees/secretaries about available mechanisms to expedite transfer/forfeiture on resignation or removal.

7. Constituent document dependency: nomination/appointment must be in accordance with the constituent document (section 5(a)), and disposals must be subject to it (section 7(f)). If a constituent document is silent, ambiguous, or contains transfer restrictions, those rules could frustrate compliance with the instrument’s conditions and thereby invalidate the exemption for a person who cannot transfer “as soon as practicable.”

8. No express administrative process or record‑keeping rule stated: the instrument does not tell persons how to notify APRA or to evidence their compliance. Affected persons must therefore anticipate that APRA may request documentary proof, and should maintain clear records of shareholding percentages, acquisition dates, statements of associates, and constituent document provisions.

9. Narrow coverage of class: the instrument covers nominees appointed in accordance with the constituent document, current directors and former directors (section 5). Other persons,senior executives who are not directors, beneficial owners not meeting the narrow definition of associate in clause 4(1)(e), or entities acting through complex corporate structures,may not be covered. Relying on the instrument without verifying that the person falls into the Schedule, section 5 class is risky.

10. Absence of penalty and enforcement text in the instrument: because the Schedule does not state enforcement consequences, persons might underestimate the legal effect of non‑compliance. Breach may expose the person to regulatory action under the Act, but that will depend on the Act’s provisions, not on this instrument.

In practice, these “gotchas” mean you should:

• read the cited provisions in the Act and the FSS Act before advising a client;
• obtain and review the RSE licensee’s constituent document for transfer/forfeiture mechanics;
• document acquisition dates, share percentages and the identity and qualifying status of associates; and
• where there is ambiguity, consider engaging APRA or obtaining written confirmation from APRA or the RSE licensee before relying on the exemption.

Compliance with this instrument requires satisfying its substantive conditions and being able to evidence that satisfaction. The Schedule effectively imposes a checklist of factual and documentary requirements; practitioners should address each element in turn.

1. Determine whether the person is in the covered class (Schedule, section 5):

• Confirm the person is a nominee for appointment who was subsequently appointed in accordance with the constituent document, or is a current director, or is a former director. Maintain board minutes, appointment resolutions and constituent document records to evidence that the appointment process complied with the constituent document.

2. Establish whether the exemption is desired and which sections are relevant:

• Identify the practical effect of an exemption from sections 29HA and 29JCB by reading those two sections of the Act. The instrument exempts from compliance with those sections (Schedule, section 6). Knowing what obligations are being displaced is essential to advising on compliance risk.

3. Meet and document the 15% direct control interest cap (Schedule, section 7(a)):

• Use the FSS Act definition of “direct control interest” (clause 11 of Schedule 1) to calculate the person’s direct control interest at particular times. Keep contemporaneous share registers and transaction records. If a person has any direct control interest higher than 15% at a given time, the exemption will not apply.

4. If the person’s stake exceeds 15%, ensure it does so only via permitted aggregation (Schedule, section 7(b)):

• Calculate whether the stake exceeding 15% arises solely by aggregating the person’s own direct control interest and the direct control interests of associates. Only include associates that satisfy clause 4(1)(e) of Schedule 1 of the FSS Act and who are directors (Schedule, section 7(c)). Obtain declarations from purported associates confirming their status and maintain those declarations.

5. Verify timing of acquisition of controlling stake (Schedule, section 7(d)):

• Confirm that any acquisition of a controlling stake occurred on or after the instrument’s commencement date. Maintain purchase contracts, settlement records and board resolutions that evidence the acquisition date.

6. Ensure no entitlement to a financial benefit directly arising from the shareholding (Schedule, section 7(e)):

• Apply the instrument’s definition of “financial benefit” and ensure the person is not entitled to benefits directly arising from the acquisition or holding of a share. Director remuneration is excluded from that definition, but dividends, distributions, buyback proceeds or share‑linked benefit arrangements may be caught. Prepare legal memoranda analysing whether specific benefits are “directly arising” and obtain written client confirmations.

7. Plan for disposal on ceasing office and review constituent document transfer provisions (Schedule, section 7(f)):

• Review the RSE licensee’s constituent document for transfer and forfeiture mechanisms. Determine whether those mechanisms allow prompt transfer or forfeiture “as soon as practicable” following cessation of directorship. If constituent document provisions are lengthy or restrictive, consider seeking amendments to those constituent document clauses or obtaining pre‑agreed arrangements consistent with the instrument’s requirement.

8. Recordkeeping and evidentiary posture:

• Keep a compliance file including: copies of the instrument; a written calculation of direct control interest and stake; identity and status of associates (with evidence showing why they meet clause 4(1)(e) where applicable); acquisition contracts showing the date of controlling stake acquisition, if any; constituent document provisions; director remuneration arrangements; and board minutes of appointment and cessation. In the absence of a formal notification process in the instrument, be prepared to provide this file to APRA on request.

9. Board governance and conflicts management:

• Because the instrument permits shareholdings by directors that might aggregate to controlling stakes in limited circumstances, boards should ensure conflicts policies are robust and that director duties (fiduciary and statutory) are observed. Document board declarations of interest, conflicts registers and any mitigation steps taken in respect of conflicted matters.

10. Obtain legal and possibly regulatory confirmation in borderline cases:

• Where ambiguity exists,about whether an associate qualifies under clause 4(1)(e), whether a given benefit counts as a “financial benefit”, whether a constituent document’s transfer provisions meet the “as soon as practicable” standard,seek legal advice and consider approaching APRA for clarification or written confirmation before relying on the exemption.

11. Ongoing monitoring and refresh:

• The exemption’s conditions are fact‑sensitive and may change over time (e.g., shareholding percentages, associate relationships, cessation of directorship). Establish a compliance regime to recalculate direct control interest and aggregate stakes at material times, and to trigger disposal obligations promptly on cessation of office.

In practice, compliance means treating the instrument as imposing a package of documentary and behavioural constraints that must be demonstrably satisfied. Because the instrument does not prescribe an APRA notification or approval process, prudent practice is to maintain clear contemporaneous records and be ready to demonstrate compliance to APRA if required.