Can I accept foreign “wholesale” investors into my fund?

13th March 2025

THE QUICK ANSWER:

Generally, yes, foreign “wholesale” investors can invest in your fund, providing they comply with their local laws and restrictions. You cannot market or distribute the fund in foreign jurisdictions, unless you comply with the financial services laws and restrictions in those jurisdictions, which can be difficult and expensive to do in practice.

A common question we get asked by Investment Managers is “Can I accept foreign investors into my fund”?

THE RULES FOR FOREIGN INVESTORS

If foreign wholesale investors discover your fund, then generally, from an Australian regulatory perspective, they can invest in it if they comply with the relevant laws and restrictions in their country (and provided you are satisfied the investor qualifies as a “wholesale client” under the Corporations Act).

However, you cannot market your fund in foreign jurisdictions, unless you first comply with the financial services laws and restrictions in those jurisdictions, including obtaining any necessary approvals and licences. In some countries, it may not be possible (or, it may be very difficult and expensive) to obtain the necessary local approvals and licences.

If you are contacted by a prospective “wholesale” investor from another country requesting your fund’s IM or other information, then from an Australian regulatory perspective, you can send it to them – as long as you are not marketing or distributing the fund to them, and are merely responding to their initiative.

Caution needs to be exercised though. Marketing activities may include running your own advertisements in another country, email or phone campaigns to residents of another country, paid social media campaigns targeted at prospects in another country, and campaigns run by third-party representatives and agencies. The laws and regulations of each country are different; and some countries have regulatory regimes which purport to apply even to foreign-based financial services providers. In this Internet age of world-wide communication and website access, there can be uncertainty as to exactly “where” (or from where) activities are occurring.

Separately, there might be Australian tax or foreign ownership (FIRB) issues you will need to consider before onboarding any foreign investors into your fund, depending on the types of investments the fund makes and the make-up of the fund’s investor base.

HOW MIGHT FOREIGN INVESTORS LEARN ABOUT YOUR FUND?

Foreign investors may become aware of your fund through, for example, a recommendation by another investor, a contact in Australia, or by browsing the Internet. You should point out that it is their responsibility to obtain any necessary local approvals, and to comply with all local regulations and restrictions, relevant to investing in your fund.

They should inform themselves of the legal and regulatory requirements in relation to applying for, holding, and dealing with, interests in the fund. This will also include any applicable monetary/exchange control regulations and taxes in the countries of their respective citizenship, residence, domicile, or place of business.

LEARN MORE ABOUT RULES FOR FOREIGN INVESTORS

To find out more about the rules around accepting foreign investors into your fund, book an appointment with our team.

ABOUT MARQ TRUSTEES

Established in 2014, MARQ Trustees brings together a team with decades of financial services experience in managed funds. Under the authority of our Australian Financial Services License (AFSL), our firm provides services to wholesale managed investment schemes including trustee, custody and other AFSL services; advisory, fund administration and registry services; as well as fund to market and capital raising advice. For more information, contact us via phone: +61 3 9005 9282 or email: [email protected].

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