ASIC to extend withdrawal relief to unlisted property funds

Further to our update of 19 August 2009, on 23 December 2009 the Australian Securities and Investments Commission (ASIC) announced an intention to grant conditional relief for investors in frozen mortgage funds to enable a responsible entity to implement a ‘rolling’ withdrawal offer over a 12 month period. A copy of the ASIC announcement can be found here.

A ‘rolling’ withdrawal offer is an offer made by a responsible entity to all members of a frozen mortgage fund an opportunity to withdraw, wholly or partly, from that fund.

On 16 March 2010, at the Australian Direct Property Investment Association Annual Conference, ASIC announced an intention to extend this relief to unlisted property funds.

ASIC intended to grant conditional relief for a ‘rolling’ withdrawal offer that has the following features:

  • the offer exists for one calendar year and applies to all withdrawal opportunities made by the responsible entity over that calendar year
  • all members can opt to provide a withdrawal request to the responsible entity, which applies to all withdrawal opportunities made by the responsible entity over the calendar year until it is withdrawn or amended by the member and
  • all members can lodge a withdrawal request with the responsible entity at any time during the calendar year.

This differs from a withdrawal offer (pursuant to Chapter 5C of the Corporations Act) which requires the offer to withdraw to be effected proportionately for all member who accept the offer. Also withdrawal offers under Chapter 5C cannot be made as a standing withdrawal offer.

The announcement also provides that the relief, which will apply for a period of three years or until the frozen fund becomes liquid, will be subject to the responsible entity:

  • providing all members of the fund with information about the amount of each withdrawal opportunity and how the withdrawal opportunity is being funded prior to the withdrawal opportunity becoming open
  • including reminders about members’ ability to participate in the rolling withdrawal in any correspondence, statement or disclosure provided to members
  • notifying all members in writing of the outcome of each withdrawal opportunity within a reasonable period after the outcome is known by the responsible entity
  • maintaining a website that contains all relevant and up to date information in relation to the rolling withdrawal offer
  • distributing all available cash to the members for so long as the withdrawal requests from members exceed available cash
  • providing ASIC with information about each withdrawal opportunity, including the amount made available to satisfy withdrawal requests from members, as soon as practicable after the withdrawal amounts are paid.

Relief will generally be granted on individual application by responsible entities of frozen funds. To apply for the relief, an applicant will need to lodge an application for relief with ASIC.

Although this is a welcome initiative by ASIC, at the end of the day frozen funds need cash in order to be able to redeem fund units and if cash is not available then members cannot withdraw from the frozen funds.

The Hall & Wilcox Financial Services team has experience in:

  • providing advice to responsible entities in relation to hardship relief
  • applying for hardship relief for registered managed funds with ASIC and
  • preparing ancillary documents for responsible entities in respect of hardship relief applications submitted by members.


Harry New

Harry leads our financial services team and focuses extensively on financial services law and corporate advisory.

John Bassilios

John Bassilios

Partner & Fintech and Blockchain Lead

John has broad experience in financial services, funds management, blockchain, crypto, web3 and corporate law.

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