PEF regulation in Australia

Overseeing operation of PEFs in Australia is the sole responsibility of ASIC (the country’s main financial regulator). PEF managers holding an AFSL license are required to submit audited financial statements to ASIC & comply with its strict requirements. ASIC can at any time check financial records of AFSL license holders. 

Generally speaking, registering a PEF in Australia is a rather cumbersome process requiring potential applicants to comply with a number of stringent rules & requirements. 

So, let’s see what they are.

Registering PEFs in Australia: Regulators

Apart from ASIC, which has the power to grant a financial license in Australia, other financial regulators include AVCAL. Except for its main regulatory functions, the organization is also involved in promoting direct investment, providing incentives for venture capitalists & advocating the industry’s interests when dealing with the Australian government.

Australia: Licensing of PEFs

As mentioned above, managing & operating investment schemes in Australia requires obtaining an AFSL license & complying with strict licensing terms. To be able to set up a PEF in Australia, its operator must have no less than ten million Australian dollars (which represent ten percent of their average annual income) & apply for a permit authorizing the issue of shares and & providing consultations on financial products.

Investment Consultants

PEF directors or investment managers do not normally have to apply for a license unless they act as physical persons who:

• bear responsibility for taking decisions pertaining to provision of financial services;
• possess the required skills & knowledge to provide financial services & products;
• comply with requirements for knowledge and skills contained in relevant regulatory acts.

Hence it follows that investment advisors aren’t required to be licensed if they meet the above conditions.

Establishing PEFs in Australia: Anti-Corruption Regulations 

Each of Australia’s states has its own anti-bribery & anti-corruption laws prohibiting bribery of foreign & federal officials & government employees.

Australian states also have special anti-corruption agencies charged with investigating & reporting corruption in government agencies. Their sweeping powers allow them to launch investigations, question witnesses & conduct financial audits.

To ensure transparency & increase public awareness, all anti-corruption investigations & legal proceedings are normally held in public. 

Conclusion

As mentioned above, setting up a PEF in Australia requires compliance with ASIC requirements and incorporation regulations. We do hope that the information contained in this article will shed some light on PEF regulation in Australia & help potential investors understand what steps they need to follow to establish a PEF in Australia.