ASIC relief on changing scheme constitutions

ASIC recently issued Class Order 09/552 (Class Order) providing relief to enable a responsible entity of a registered scheme to modify or repeal and replace the scheme’s constitution without a special resolution where it is impossible or disproportionately burdensome to hold a meeting of members of the scheme.

The Class Order provides that a constitution of a registered scheme may be modified or repealed and replaced with a new constitution by the responsible entity if at least one of the following is satisfied:

• a meeting of members is unable to be held because a quorum is not capable of being satisfied due to the scheme having an insufficient number of members
• every member of the scheme is not entitled to vote at a meeting of members because of section 253E (ie where the responsible entity or its associates are not permitted to vote on a resolution as a result of having an interest in the resolution other than as a member) or
• all interests in the scheme were issued:
  • in situations that did not require a PDS
  • without disclosure to investors under Part 6D.2 and
  • without a prospectus under Division 2 of Part 7.12 of the old Corporations Law.

The relief is conditional upon:

• the responsible entity providing the scheme’s members, auditor and compliance plan auditor, all information that the responsible entity reasonably expects to be material to the decision of a member whether to consent to the amendment and
• after receiving the above information, every member of the scheme provides their written consent to the modification or repeal and replacement.

Examples of situations where the relief might apply include:

• schemes with a limited number of seed investors who are wholesale clients or
• infant schemes that require changes to their constitution before commencing operation, for example where the scheme has been registered but the scheme’s final features have not been settled yet.

Please contact a member of the Hall & Wilcox Financial Services team if you require assistance in relation to the Class Order.