On 6 May 2010, the Commonwealth assumed responsibility for the regulation of the activities of private trustee companies, under the Corporations Legislation Amendment (Financial Services Modernisation) Act 2009. Previous to this, Trustee corporations were authorised under State or Territory laws.
Under the new legislation, which was enacted in late 2009, the provision of traditional' services by Trustee companies is regulated as a financial service under the Corporations Act. All Trustee companies providing traditional Trustee services in Australia are required to hold an Australian Financial Services Licence.
Under the legislation, which is administered by the Australian Securities and Investments Commission, Trustee corporations must adhere to certain requirements, including;
* Having a risk management system in place that addresses risk to financial resources;
* Maintaining adequate levels of capital;
* Maintaining adequate levels of insurance;
* Having directors and senior managers who are fit and proper' with relevant experience and expertise;
* Maintaining accurate records; and
* Submitting regular financial reports.
Trustee corporations are also subject to:
* The relevant regional Trustee Act;
* The Superannuation Industry (Supervision) Act 1993; and
* The Corporations Act 2001
Any registered managed investment scheme in Australia must put in place a responsible entity.
A responsible entity must act honestly, and in the best interest of the members of the investment scheme. They must act as any reasonable person would, were they in the position of the responsible entity
A responsible entity must treat all members who hold interests of the same class equally, and those who hold different classes must be treated fairly. The responsible entity must not make use of private information they encounter as part of their duties, either for their own advantage, or to the detriment of the members of the scheme.
They must ensure their registered scheme has a constitution and compliance plan, both which meet the relevant legal and regulatory requirements.
Any property of the responsible entity must be kept separate from scheme property, which must be clearly identified as scheme property and regularly valued.
The responsible entity must report to ASIC any breach of the Corporations Act which relates to their managed investment scheme, or which is likely to have a materially adverse impact on the members of the scheme.
A duty of the responsible entity under the Act overrides any conflicting duties an officer or employee of the responsible entity has.
The responsible entity and its associates are not entitield to vote on a resolution of the schemes members if they have an interest in the resolution or matter, other than as a member. However, if the scheme is listed, the responsible entity is entitled to vote on resolutions to remove the responsible entity and choose a new one.
