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ASIC registered or unregistered fund?

A. Generally, it is easier and cheaper to structure and promote a fund as an unregistered fund compared to a registered fund. A registered fund is a far more onerous undertaking with a multitude of compliance, governance, audit and reporting requirements which are not required for an unregistered fund. However, the requirement for a fund to be registered is largely dependent on the investor base being targeted for investment – i.e. wholesale or retail investors. Wholesale funds (comprised of wholesale investors), are not required to be registered. Retail funds (comprised of retail investors), are required to be registered.

B. Funds are primarily registered to enable them to be promoted to retail investors which make up the broader marketplace. Some Licensees also register funds to demonstrate their commitment to compliance and to provide some additional safeguards for investors.

C. Generally, an investor must invest a minimum of $500,000 to be classed as a ‘wholesale investor’. Alternatively, if an investor invests less than $500,000 they can still qualify as a ‘wholesale investor’ if they have their accountant provide a certificate stating that they have net assets of at least $2.5m or that their gross income for each of the last 2 years exceeded $250,000.

This test is applied on a ‘grouped’ basis where the investor’s gross assets and net income can be grouped with the gross assets/net income of a company, trust and self-managed superannuation fund controlled by the person.

D. If an investor is not a wholesale investor (or a Professional Investor or a Sophisticated Investor – see Glossary), they are a ‘retail investor’.

 

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