In a procedure that started more than 3 years ago, the Association of the Luxembourg Fund Industry (ALFI) has succeeded in obtaining an exemption from the obligation to hold an Australian financial services (AFS) licence to provide financial services in Australia. This exemption applies as of 16 November 2016 to all Luxembourg undertakings for collective investment in transferable securities (UCITS) management companies, as well as all so-called self-managed SICAVs and will facilitate the marketing of UCITS to institutional investors in Australia.
Typically, any foreign financial services provider such as a Luxembourg management company needs to hold an Australian financial services license if it intends to provide financial services (such as distribution of investment fund shares) in Australia. However, the Australian Securities & Investments Commission (ASIC) can exempt a foreign financial services provider from this requirement under two conditions: It needs to be (i) regulated by certain overseas regulators and (ii) these financial services will be provided to wholesale (institutional) clients only.
As to the first condition, the relevant regulatory regime needs to be sufficiently equivalent to the Australian regulatory regime, which has been accepted in relation to Luxembourg. In addition, effective cooperation agreements must be in place before the relief is granted. In the present case, the Australian supervisory authority, ASIC, and the Luxembourg financial supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF), have signed a "Memorandum of Understanding" on mutual cooperation and the exchange of information related to the supervision of regulated entities in September 2013.
As a result of the negotiations between ASIC and ALFI, the exemption to the requirement for such AFS license applies to:
- Management companies, which are regulated by the CSSF and which can manage UCITS pursuant to part I of the Luxembourg law of 17 December 2010 on undertakings for collective investments (the "Law of 2010"), the so-called "Chapter 15 Management Company"
- UCITS that have not appointed a management company and have designated themselves as "self-managed"
The relevant exemption is not applied automatically but each Luxembourg entity that wishes to implement it needs to lodge certain documentation with the ASIC. The DLA Piper team in Australia can assist with the preparation of such documents.
Background information on the AFS licence relief:
ASIC has issued "ASIC Corporations (CSSF Regulated Financial Services Providers) Instrument 2016/1109" which sets out the conditions of this AFS licensing relief. The AFS license relief entered into force on 16 November 2016 and will apply until 28 September 2018.
Further information can be obtained from the author, from DLA Piper Luxembourg, or from ALFI.