ASIC has released Consultation Paper 207 Charitable investment fundraisers (CP 207) proposing reforms for charities (including religious charitable development funds (RCDFs)) that raise investment funds.
The proposals do not affect fundraising by charities in the form of donations.
The Consultation Paper proposes to either:
- remove existing exemptions available to charities that raise investment funds under Regulatory Guide 87 Charities (RG 87) from 28 June 2014 (Option A), or
- retain existing exemptions on the basis that they are only available to organisations that satisfy both existing and new conditions to the exemptions (Option B).
ASIC is proposing that in order to fundraise charities must hold 75% of their assets in assets that directly relate to their charitable purpose; and where the fund is offered to retail clients:
- have an Australian financial services licence, and
- meet minimum capital and liquidity requirements.
ASIC has chosen 28 June 2014 for Option A because it aligns with the date that APRA proposes in its discussion paper issued 19 April 2013 as the date from which amendments to current exemptions under the Banking Act for RCDFs would become effective.Background
The exemptions in Option B would only be of assistance to a debenture issuer if it obtained any exemption required from the Banking Act. APRA has proposed for discussion that from 28 June 2014 it will no longer give an exemption for RCDFs, a number of which are also charitable investment fundraisers, where the RCDF accepts retail investments.
ASIC proposes to roll over relief that is currently available to schools for school enrolment deposits without amending the terms of the relief.
If Option B is adopted the amendments to the existing exemptions will be phased in over several years and be subject to a transition period.
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Posted 21st May 2013 by David Jacobson in Charities, Corporations Act, Funds