ASIC RG 121 — ASIC Regulatory Guide – RG 121 Doing financial services business in Australia

Page 1 REGULATORY GUIDE 121 Doing financial services business in Australia September 2024 About this guide This is a guide for people or companies from overseas who propose to conduct a financial services business in Australia. It provides general guidance on the financial services regime in Australia, including:  when a person or company from outside Australia may be required to hold an AFS licence to carry on a financial services business in Australia;  circumstances in which a person or company may be exempt from holding an AFS licence; and  some of the obligations associated with being an AFS licensee. Page 2 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 2 About ASIC regulatory documents In administering legislation ASIC issues the following types of regulatory documents. Consultation papers: seek feedback from stakeholders on matters ASIC is considering, such as proposed relief or proposed regulatory guidance. Regulatory guides: give guidance to regulated entities by:  explaining when and how ASIC will exercise specific powers under legislation (primarily the Corporations Act)  explaining how ASIC interprets the law  describing the principles underlying ASIC’s approach  giving practical guidance (e.g. describing the steps of a process such as applying for a licence or giving practical examples of how regulated entities may decide to meet their obligations). Information sheets: provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Reports: describe ASIC compliance or relief activity or the results of a research project. Document history This version was issued in September 2024 and is based on legislation and regulations as at the date of issue. In June 2025 we updated references to reflect changes to Regulatory Guide 1 Applying for and varying an AFS licence (RG 1) and related guidance. In April 2026 we made amendments to reflect renamed Regulatory Guide 168 Product Disclosure Statements: Disclosure and other obligations (RG 168), remove out-of-date information, and reflect current style and drafting practices. Previous versions:  Superseded Regulatory Guide 121, issued 11 August 2008, reissued 1 April 2011 and 30 July 2013 Disclaimer This guide does not constitute legal advice. We encourage you to seek your own professional advice to find out how the Corporations Act and other applicable laws apply to you, as it is your responsibility to determine your obligations. Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements. Page 3 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 3 Contents A Overview ........................................................................................... 4 About this guide ................................................................................. 4 ASIC’s regulation of the financial services industry ........................... 5 The general requirement to be licensed ............................................ 5 Exemptions from the licensing requirement ...................................... 5 Obligations of AFS licensees ............................................................. 6 Offering financial products in Australia .............................................. 6 Other rules and legislation that may apply ........................................ 6 B ASIC’s regulation of the financial services industry ................... 7 What is ASIC’s role? .......................................................................... 7 The laws that ASIC administers ........................................................ 7 Key concepts of the AFS licensing regime ........................................ 8 C The general requirement to be licensed ...................................... 14 Do you need an AFS licence? ......................................................... 14 ‘Carrying on a financial services business in Australia’ ................... 14 D Are you exempt from holding an AFS licence? .......................... 18 Categories of exemption .................................................................. 18 Exemptions for FFSPs ..................................................................... 18 Connection with an AFS licensee .................................................... 19 Financial services that involve only the financial services provider. 20 Alternative regulatory regime ........................................................... 20 Financial services business is not the sole or principal purpose of the activity ........................................................................................ 20 Foreign collective investment schemes ........................................... 21 E Obligations for AFS licensees ...................................................... 22 AFS licensee is ultimately responsible for all its financial services . 22 General AFS licensee obligations ................................................... 22 Conduct obligations ......................................................................... 23 Disclosure obligations ...................................................................... 24 Design and distribution obligations .................................................. 24 Additional obligations: Financial product advice to retail clients...... 24 When do representatives need to hold an authorisation? ............... 26 What obligations are imposed on representatives? ........................ 27 F Offering financial products in Australia ...................................... 28 Disclosure obligations that apply to offering financial products ....... 28 Disclosure obligations that apply to offering securities .................... 29 G Other rules and legislation that may apply ................................. 30 Operating rules and market integrity rules ....................................... 30 Foreign investment .......................................................................... 30 Banking and insurance .................................................................... 31 Credit activities ................................................................................ 31 Payment systems and the transfer of funds .................................... 31 Financial accountability regime........................................................ 31 Australian taxation laws and other rules .......................................... 32 Appendix: Exemptions from holding an AFS licence........................ 33 Key terms ............................................................................................... 45 Related information ............................................................................... 50 Page 4 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 4 A Overview Key points Persons and companies from outside of Australia that wish to engage in a financial services business in Australia need to consider whether they are required to be licensed or have other obligations under legislation administered by the Australian Securities and Investments Commission (ASIC). ASIC regulates companies and financial services businesses and promotes investor, creditor and consumer protection by administering relevant laws. The main source of obligations relevant to a foreign person or company in the Australian financial market is the Corporations Act 2001 (Corporations Act): see Section B. Generally, if you carry on a financial services business in Australia, you will need to hold an Australian financial services (AFS) licence or an authorisation from an AFS licensee: see Section C. Some exemptions from the requirement to be licensed may apply: see Section D. AFS licensees and their representatives must comply with certain obligations: see Section E. There are disclosure obligations related to offering financial products in Australia to a retail client: see Section F. There may be other rules and legislation relevant to your financial services business in Australia depending on the circumstances: see Section G. About this guide RG 121.1 This regulatory guide contains general guidance on whether a person or company from outside Australia may be required to hold an AFS licence to carry on a financial services business in Australia. It covers: (a) ASIC’s regulation of the financial services industry; (b) the AFS licensing requirement and exemptions that might apply; (c) the obligations of AFS licensees; (d) offering financial products in Australia; and (e) other legislation and rules that may apply to a foreign person or company in the Australian financial market. Note 1: This guide does not specifically deal with the issue of when a foreign company must be registered under Pt 5B.2 of the Corporations Act. Note 2: In this guide, references to parts (Pts), divisions (Divs) and sections (s) are to the Corporations Act, unless otherwise specified. References to regulations (reg) are to the Corporations Regulations 2001 (Corporations Regulations), unless otherwise specified. Page 5 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 5 ASIC’s regulation of the financial services industry RG 121.2 We administer legislation that includes the Corporations Act. Chapter 7 regulates the financial services industry in Australia. RG 121.3 Section B of this guide introduces some of the key concepts in Ch 7. These include: (a) ‘financial product’; (b) ‘financial service’; (c) ‘wholesale’ versus ‘retail’ clients; and (d) ‘authorised representative’. The general requirement to be licensed RG 121.4 If you are a foreign person or company, you may need an AFS licence to carry on a financial services business in Australia (unless an exemption applies). RG 121.5 To help you determine whether you need an AFS licence, Section C provides guidance on the following questions: (a) What is carrying on a financial services business? (b) When does the activity occur in Australia? (c) When does a foreign person or company induce people in Australia to use a financial service? Exemptions from the licensing requirement RG 121.6 There are certain circumstances in which a foreign person or company may carry on a financial services business in Australia without holding an AFS licence: see Section D. RG 121.7 Exemptions are available: (a) for foreign financial services providers (FFSPs); (b) for business carried on in connection with an AFS licensee; (c) in relation to financial services that involve only the financial services provider itself; (d) because the financial service is subject to an alternative regulatory regime; (e) because the financial services business is not the sole or principal purpose of the activity; and (f) in relation to a foreign collective investment scheme (FCIS). Page 6 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 6 Obligations of AFS licensees RG 121.8 If you hold an AFS licence, you must comply with various obligations under the Corporations Act. These include obligations relating to: (a) undertaking particular conduct in certain situations (see RG 121.69– RG 121.70); and (b) disclosing certain information in a Financial Services Guide (FSG) to retail clients (see RG 121.71). RG 121.9 There are additional obligations that apply when an AFS licensee provides financial product advice to retail clients: see RG 121.73–RG 121.76. RG 121.10 If you provide financial services in Australia as a representative of another person or company, you generally must hold an authorisation under the Corporations Act from that person or company. There are separate obligations imposed on representatives under the Corporations Act: see RG 121.77–RG 121.80. Offering financial products in Australia RG 121.11 If you offer financial products to a retail client, you may be obliged to provide the client with a Product Disclosure Statement (PDS). This obligation may apply even if you are exempt from the requirement to be licensed. If the financial product being offered is a security, you may be obliged to provide a prospectus rather than a PDS: see Section F. Other rules and legislation that may apply RG 121.12 There are other rules and legislation that may apply to your activities as a foreign person or company in the Australian financial market, including: (a) the operating rules of the financial markets licensed to operate in Australia; (b) the ASIC market integrity rules; (c) laws relating to foreign investment in Australia; (d) laws relating to banking and insurance; (e) laws relating to credit activities; (f) laws relating to payment systems and the transfer of funds; (g) laws relating to the financial accountability regime; and (h) Australian taxation laws. Note: For more information, see Section G. Page 7 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 7 B ASIC’s regulation of the financial services industry Key points ASIC regulates registered companies, markets and financial services providers in Australia, and administers legislation that includes the Corporations Act. Chapter 7 regulates the financial services industry. This section provides guidance on some of the key concepts in Ch 7, such as ‘financial product’, ‘financial service’, ‘wholesale client’ versus ‘retail client’ and ‘authorised representative’. What is ASIC’s role? RG 121.13 We are an independent Australian Government body and Australia’s integrated corporate, markets, financial services and consumer credit regulator set up under the Australian Securities and Investments Commission Act 2001 (ASIC Act). RG 121.14 Our role under the ASIC Act includes maintaining, facilitating, and improving the financial system and promoting confident and informed participation by investors and consumers in the financial system. RG 121.15 We license and monitor financial services providers and markets to ensure that they operate efficiently, honestly and fairly. These businesses are typically involved in superannuation, managed funds, shares and company securities, derivatives and insurance. We maintain a publicly available register of AFS licensees and authorised representatives of AFS licensees. The laws that ASIC administers RG 121.16 The legislation that we administer includes the ASIC Act, the Corporations Act, the Corporations Regulations, the National Consumer Credit Protection Act 2009 (National Credit Act), the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Financial Accountability Regime Act 2023 (FAR Act). RG 121.17 This guide is mainly about the obligations in the Corporations Act and Corporations Regulations that may be relevant to foreign people or companies. There are other laws and rules that may apply to foreign people or companies, depending on the circumstances: see Section G. Page 8 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 8 Key concepts of the AFS licensing regime RG 121.18 Chapter 7 regulates the financial services industry in Australia. This includes the regulation of financial services, most financial products and the providers of financial services and products. RG 121.19 This section introduces key concepts of Australia’s financial services regime. You should refer to the Corporations Act for more information. Financial products RG 121.20 A ‘financial product’ is a facility that allows a person to make a financial investment, manage a financial risk or make non-cash payments. A financial product includes any of the following: (a) shares; (b) debentures; (c) interests in a managed investment scheme; (d) interests in a notified foreign passport fund; (e) derivatives; (f) general insurance; (g) life insurance; (h) superannuation; (i) basic deposit products; (j) retirement savings accounts; (k) deposit-taking facility made available by a bank; (l) foreign exchange contracts; (m) Australian carbon credit units (ACCUs); (n) eligible international emissions units (EIEUs), including safeguard mechanism credit units; and (o) margin lending facilities. Note: The definition of ‘financial product’ is found in Div 3 of Pt 7.1. RG 121.21 A facility may not be a financial product if the aspect of the facility that allows a person to make a financial investment, manage a financial risk or make non-cash payments is an incidental aspect of the facility. Note: See s763E on when an aspect of a facility is incidental. RG 121.22 ASIC has the power to exclude products from the financial services regime as appropriate. Note: For information on how to make an application to ASIC (e.g. to exclude particular products from, or seek relief from certain obligations under, the regime), see Regulatory Guide 51 Applications for relief (RG 51). Page 9 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 9 Financial services RG 121.23 As described in Section C, the AFS licensing regime is structured around whether a person is providing a financial service. RG 121.24 Generally, you are providing a financial service if you: (a) provide financial product advice; (b) deal in a financial product; (c) make a market for a financial product; (d) operate a registered managed investment scheme; (e) operate the business and conduct the affairs of a corporate collective investment vehicle (CCIV); (f) provide a custodial or depository service; (g) provide traditional trustee company services; (h) provide a crowd-funding service; (i) provide a superannuation trustee service; or (j) provide a claims handling and settling service. Note: See Div 4 of Pt 7.1 for provisions on when a person provides a financial service. What is the meaning of ‘provide financial product advice’? RG 121.25 A recommendation or a statement of opinion, or a report of either of those things, constitutes ‘financial product advice’ if it is provided with the intention of influencing a person’s decision in relation to a financial product or could reasonably be regarded as being intended to have such an influence (and is not exempted from the definition of ‘financial product advice’). Note: There are two types of financial product advice under the Corporations Act: personal and general advice. For more information about these two types of advice and your obligations, see RG 121.73–RG 121.76, Regulatory Guide 36 Licensing: Financial product advice and dealing (RG 36) and Regulatory Guide 175 AFS licensing: Financial product advisers—Conduct and disclosure (RG 175). RG 121.26 The following considerations will help you determine whether a communication constitutes financial product advice: (a) the overall impression and circumstances of a communication; (b) whether the communication is merely factual information; and (c) whether a decision on a particular financial product or class of financial product is made. Note: For more information about these considerations, see Section B of RG 36. RG 121.27 A communication might be exempt from being financial product advice if it is: (a) advice given by a lawyer or tax agent (in the course of their ordinary activities); Page 10 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 10 (b) a quote relating to the cost of a financial product or the rate of return on a financial product; or (c) a recommendation or opinion, or a report of either of those things, which is reasonably necessary as part of handling and settling an insurance claim. Note 1: For more information on circumstances where a person does not provide financial product advice, see ‘Circumstances where a person does not provide financial product advice’ in RG 36. Note 2: For more information on when financial product advice is or is not reasonably necessary as part of handling an insurance claim, see Information Sheet 253 Claims handling and settling: How to comply with your AFS licence obligations (INFO 253). What is the meaning of ‘deal in a financial product’? RG 121.28 The following conduct may constitute ‘dealing in a financial product’: (a) applying for or acquiring a financial product; (b) issuing a financial product; (c) for securities or managed investment schemes, underwriting the securities or interests; (d) varying a financial product; or (e) disposing of a financial product. RG 121.29 Arranging for a person to engage in the conduct described in RG 121.28 may also constitute dealing in a financial product. Note: For more information on dealing in financial products and ‘arranging’, see Sections C–D of RG 36. RG 121.30 There are various exceptions to the definition of dealing. For example, a person who deals on their own behalf may not be dealing in a financial product. Note: For more information, see s766C and Div 4 of Pt 7.1 of the Corporations Regulations. What is the meaning of ‘make a market for a financial product’? RG 121.31 Generally, a person ‘makes a market for a financial product’ if: (a) they regularly state the prices at which they propose to buy or sell financial products on their own behalf; and (b) other persons can reasonably expect to be able to regularly buy and sell at those stated prices. RG 121.32 There is a distinction between making a market for a financial product and operating a financial market. The general test is whether the person operates Page 11 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 11 a facility where the prices for a financial product are quoted on behalf of other persons (operating a financial market) or solely on their own behalf (making a market). Note: For more information on making a market, see s766D and Div 5 of Pt 7.1. For more information on operating a financial market, see Regulatory Guide 172 Financial markets: Domestic and overseas operators (RG 172). What is a ‘managed investment scheme’? RG 121.33 Managed investment schemes are also known as managed funds, pooled investments or collective investments. Generally, in a managed investment scheme: (a) people are brought together to contribute money to get an interest in the scheme (‘interests’ in a scheme are a financial product); (b) money is pooled together with other investors—often many hundreds or thousands of investors—or used in a common enterprise; and (c) a responsible entity operates the scheme. Investors do not have day-to- day control over the operation of the scheme. RG 121.34 Managed investment schemes cover a wide variety of investments. Some common managed investment schemes that may be offered include: (a) cash management trusts; (b) property trusts; (c) equity (trust schemes)—either Australian or international schemes; (d) agricultural schemes; (e) some film schemes; (f) timeshare schemes; (g) some mortgage schemes; and (h) actively managed strata title schemes. Note: The definition of ‘managed investment scheme’ is set out in s9, and Ch 5C regulates the creation and operation of managed investment schemes. What is a ‘custodial or depository service’? RG 121.35 A ‘custodial or depository service’ generally involves a person holding financial products or beneficial interests in financial products in trust on behalf of another (usually for a fee). Note: See s766E for the general definition of ‘provide a custodial or depository service’ and for exceptions to this definition. Page 12 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 12 What are ‘traditional trustee company services’? RG 121.36 ‘Traditional trustee company services’: (a) include: (i) performing estate management functions; (ii) preparing a will, a trust instrument, a power of attorney or an agency arrangement; (iii) applying for probate of a will, applying for a grant of letters of administration, or electing to administer a deceased estate; or (iv) establishing and operating common funds; but (b) generally do not include: (i) operating a registered scheme; (ii) providing a custodial or depository service (within the meaning of s766E); (iii) acting as trustee for debenture holders under Ch 2L; (iv) acting as a receiver or other controller of property of a corporation under Pt 5.2; or (v) acting as trustee of a superannuation fund, an approved deposit fund or a pooled superannuation trust (within the meaning of the SIS Act). Note: The definition of ‘traditional trustee company services’ is set out in s601RAC(1). What is a ‘superannuation trustee service’? RG 121.37 A person provides a superannuation trustee service if they operate a registrable superannuation entity (RSE) as trustee of the entity. This service covers all trustee activities involved in operating an RSE, at all stages of the trustee’s interactions and transactions with its members and others. Note: For more information, see s766H. What is a ‘claims handling and settling service’? RG 121.38 A person who undertakes certain specific activities in relation to an insurance product is providing insurance claims handling and settling as a financial service (a ‘claims handling and settling service’) under s766G. These activities include: (a) making a recommendation or stating an opinion in response to an inquiry about a claim or potential claim; (b) making a recommendation or stating an opinion that could influence a decision about making or continuing with a claim; (c) representing someone in pursuing a claim; Page 13 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 13 (d) assisting another person to make a claim; (e) assessing whether an insurer is liable under an insurance product; (f) deciding to accept or reject all or part of a claim; (g) quantifying an insurer’s liability under an insurance product; (h) offering to settle all or part of a claim; or (i) satisfying a liability of an insurer under a claim. ‘Wholesale’ versus ‘retail’ clients RG 121.39 Disclosure requirements in relation to the financial services regime generally apply only to ‘retail clients’ because it is recognised that ‘wholesale clients’ are in a better position to look after their own interests. A person may fall within the definition of a wholesale client if, among other things, they are: (a) a person purchasing a financial product, or a financial service related to a financial product, where the value of the product is above the prescribed threshold (currently set by Div 2 of Pt 7.1 of the Corporations Regulations at $500,000); (b) a person with certified net assets of at least $2.5 million or a person who had a gross income for each of the past two financial years of at least $250,000; or (c) a ‘professional investor’. This category includes AFS licensees, listed entities, banks and friendly societies, and other entities that may be presumed to have the expertise or access to professional advice to justify their being treated as wholesale. Note: See s761G and Div 2 of Pt 7.1 of the Corporations Regulations for provisions on wholesale and retail clients. Authorised representatives RG 121.40 An ‘authorised representative’ is a person authorised under the Corporations Act to provide a financial service or financial services on behalf of an AFS licensee. Note: This is a definition contained in s9. Authorisation is in accordance with s916A or 916B. Page 14 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 14 C The general requirement to be licensed Key points You will require an AFS licence if you ‘carry on a financial services business in Australia’, according to the Corporations Act, unless an exemption applies. The courts’ interpretation of ‘carrying on a business in Australia’ is relevant to determining whether you need an AFS licence for your activities in Australia. You will also need to hold an AFS licence if you ‘induce’ people in Australia to use the financial services you provide. Do you need an AFS licence? RG 121.41 If you intend to carry on or are carrying on a financial services business in Australia, you must hold an AFS licence authorising you to do so (unless an exemption applies). The AFS licence must contain a specific authorisation covering the provision of the financial services. Note: For more information about the scope of the AFS licensing regime, see RG 36. For more information about how to apply for an AFS licence, see Regulatory Guide 1 Applying for and varying an AFS licence (RG 1) and the AFS Licensing Kit. For more information about how we will exercise our licensing exemption power under s911A(2)(l), see Section B of Regulatory Guide 167 AFS licensing: Discretionary powers (RG 167). ‘Carrying on a financial services business in Australia’ RG 121.42 If you engage in providing a financial service, you will need to determine whether you are ‘carrying on a financial services business’ in this jurisdiction by considering: (a) what the Corporations Act says about the meaning of ‘carrying on a financial services business in Australia’ (see RG 121.43–RG 121.46); (b) how the courts have interpreted ‘carrying on a business in Australia’ (see RG 121.47–RG 121.49); and (c) what activities constitute ‘inducing’ people in Australia to use a financial service (you might need an AFS licence if you intend to induce clients in Australia to use your financial services (see s911D and RG 121.50–RG 121.51). Note 1: ‘In Australia’ or ‘in this jurisdiction’ means within the geographic area of each state and territory in Australia, including the coastal sea and any external territory (the definitions of ‘Australia’ and ‘this jurisdiction’ are set out in s9). Specified external territories include the Australian Antarctic Territory, Heard Island and McDonald Page 15 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 15 Islands, Coral Sea Islands, Ashmore and Cartier Islands, Cocos (Keeling) Islands, Christmas Island and Norfolk Island. Note 2: See Section B for an introduction to the terms ‘financial product’, ‘financial service’, ‘wholesale client’ and ‘retail client’. The statutory definition of ‘financial service’ (including the terms ‘dealing’, ‘arranging’ and ‘financial product advice’) is set out in s766A–766H; the definitions of ‘wholesale client’ and ‘retail client’ are set out in s761G and 761GA; and the definition of ‘financial product’ is set out in s762A–765A. What does ‘carrying on a financial services business in Australia’ mean? RG 121.43 You will be deemed to carry on a business in Australia if you: (a) have a place of business in Australia; (b) establish or use a share transfer office or share registration office in Australia; or (c) administer, manage, or otherwise deal with, property situated in Australia as an agent, legal personal representative or trustee, whether by employees or agents or otherwise. Note: See s21(1)–(2) and s9 (definition of ‘carry on’). RG 121.44 You will not be deemed to be carrying on a business in Australia merely because, in Australia, you: (a) are or become a party to a proceeding or effect settlement of a proceeding or of a claim or dispute; (b) hold meetings of your directors or shareholders or carry on other activities concerning your internal affairs; (c) maintain a bank account; (d) effect a sale through an independent contractor; (e) create evidence of a debt or create a charge on property; (f) secure or collect any of your debts or enforce your rights in regard to any securities relating to such debts; (g) conduct an isolated transaction that is completed within 31 days, not being one of a number of similar transactions repeated from time to time; or (h) invest any of your funds or hold any property. Note: See s21(3) and s9 (definition of ‘carry on’). RG 121.45 There are a number of statutory provisions that qualify the general concept of carrying on a business, including: (a) a person may carry on a business even if they are not carrying on that business for profit; Page 16 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 16 (b) a reference to a business of a particular kind includes a reference to a business of that kind that is part of, or is carried on in conjunction with, any other business; and (c) a reference to a person carrying on a business, or a business of a particular kind, is a reference to a person carrying on a business, or a business of that kind, whether alone or together with other persons. Note: See s18, 19 and 20. RG 121.46 Subject to these statutory provisions, the common law test of ‘carrying on a business’ will need to be applied to the activity. The statutory provisions dealing with ‘carrying on a business’ are not exhaustive. How have the courts interpreted ‘carrying on a business in Australia’? RG 121.47 The courts’ interpretation of the phrase ‘carrying on a business in Australia’ is also relevant to whether you are carrying on a financial services business in Australia. The courts stress that whether a body corporate’s activities constitute ‘carrying on a business in Australia’ depends on the factual circumstances. Cases indicate that general indicators of carrying on a business in Australia include the degree to which a body corporate’s activities in Australia are conducted with system, repetition and continuity. The nature of the business being conducted and the statutory context are also relevant factors. Note: See Facebook Inc v Australian Information Commissioner [2022] FCAFC 9 and Hungier v Grace (1972) 127 CLR 210. RG 121.48 If the financial services you provide in Australia are more than very minor (and, in particular, have elements of system, repetition and continuity), it is likely you will need an AFS licence, unless an exemption applies. However, a one-off transaction may also amount to the carrying on of a business, for example, if there is an intention that the transaction is to be the first in a series of transactions. Note: See Gebo Investments (Labuan) Ltd v Signatory Investments Pty Ltd [2005] NSWSC 544. RG 121.49 Acts of an agent acting within their actual or apparent authority are generally attributed to their principal for the purposes of Ch 7: see s769B. For example, the acts of an Australian-based agent of a company can be attributed to the company, leading to the conclusion that the company carries on business in Australia through its agent. Page 17 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 17 What activities constitute ‘inducing’ people in Australia to use a financial service? RG 121.50 If you engage in conduct that is ‘intended to induce people’ in Australia (or you engage in conduct that is likely to induce people in Australia) to use financial services you provide, then you will need to hold an AFS licence, unless an exemption applies. Note: This is because of the deeming provision in s911D, which says that such conduct is ‘taken to be’ carrying on a financial services business in Australia. We have granted specific exemptions that may apply: see ASIC Corporations (Foreign Financial Services Providers—Limited Connection) Instrument 2017/182 for ‘inducing’ wholesale clients, which applies until 31 March 2027, and ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199 for ‘inducing conduct’ in relation to the provision of ‘funds management services’ to certain types of professional investors, which commences on 1 April 2027. Note 2: If passed by Parliament, the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025 will introduce new licensing exemptions for FFSPs, replacing existing licensing exemptions. What is ‘inducing’? RG 121.51 Conduct that amounts to inducing includes attempts to persuade, influence or encourage a particular person to become a client. Table 1 provides examples of what may or may not constitute ‘inducing’. Table 1: Does your conduct constitute ‘inducing’ people in Australia? Example Do you need an AFS licence? You are an insurance company in Singapore and you place advertisements in an Australian newspaper promoting your products. You are likely to need an AFS licence, even if you are yet to provide any financial services in Australia. You are a broker in the United Kingdom and you directly contact and encourage a small number of people in Australia to buy parcels of shares on the London Stock Exchange. You are likely to need an AFS licence. You are a broker in Hong Kong and you have an advertisement for securities on your website that is accessible from Australia, but the advertisement:  is not targeted at people in Australia;  has a jurisdictional disclaimer; and  has little impact on investors in Australia. You may not need an AFS licence if there is not inducing. Page 18 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 18 D Are you exempt from holding an AFS licence? Key points You may be exempt from holding an AFS licence if you propose to carry on a financial services business in particular circumstances. This section gives an overview of the licensing exemptions that may apply to foreign people or companies. These exemptions are available under Ch 7 of the Corporations Act, the Corporations Regulations or legislative instruments made by ASIC. In some cases, we may grant case-by-case relief. Table 2 to Table 6 in the appendix provide more details about the various exemptions. Categories of exemption RG 121.52 Your activities as a foreign person or company may be exempt from the AFS licensing requirement under the provisions in Ch 7, the Corporations Regulations or legislative instruments made by ASIC. RG 121.53 This section provides an overview of the licensing exemptions that may apply. For ease of reference in this guide, we have categorised the exemptions into the following groups: (a) exemptions for foreign financial services providers (FFSPs); (b) exemptions for business carried on in connection with an AFS licensee; (c) exemptions in relation to financial services that involve only the financial services provider itself; (d) exemptions because the financial service is subject to an alternative regulatory regime; (e) exemptions because the financial services business is not the sole or principal purpose of the activity; and (f) exemptions for foreign collective investment schemes (FCIS). Exemptions for FFSPs RG 121.54 Exemptions apply to financial services activities carried on by a foreign person or company where: (a) there is no inducement for clients in Australia to use the service; (b) the financial service is trading on a licensed Australian financial market for, or dealing in, off-market products to an overseas client; Page 19 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 19 (c) the financial service relates to a product issued when an Australian client was overseas; (d) the financial service is provided to a professional investor; (e) the financial service is provided by the operator of a notified foreign passport fund; (f) the financial service is carried out in conjunction with, or is provided to, an AFS licensee; (g) the foreign person or company provides financial services only to wholesale investors, is regulated by a foreign regulator specified by ASIC and was able to rely on transitional relief for entities regulated by foreign regulators as at 31 March 2020; (h) certain financial services are provided by a foreign authorised deposit- taking institution (ADI); or (i) the financial service is provided to a wholesale client and is predominantly provided outside the Australian jurisdiction. Note 1: See Table 2 in the appendix for more details. Note 2: On 31 March 2020, ASIC replaced licensing relief for entities regulated by a foreign regulator overseeing a regulatory regime determined by ASIC to be sufficiently equivalent to Australia’s regulatory regime with a foreign AFS licensing regime set out in ASIC Corporations (Foreign Financial Services Providers—Foreign AFS Licensees) Instrument 2020/198. For more information about eligibility and how to apply for a foreign AFS licence, see Regulatory Guide 176 Foreign financial services providers (RG 176). The transitional relief has been extended until 31 March 2027 for entities that relied on the relief as at 31 March 2020. Note 3: If passed by Parliament, the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures) Bill 2025 will introduce new licensing exemptions for FFSPs, replacing existing licensing exemptions. Exemptions on a case-by-case basis RG 121.55 We will consider applications for licensing relief by FFSPs that do not fit within the terms of the transitional relief described in Table 2. The policy under which we consider such applications is RG 51, RG 176 and Information Sheet 157 Foreign financial services providers: Licensing relief (INFO 157). Connection with an AFS licensee RG 121.56 These exemptions apply where a financial services business is carried on in relation to an AFS licensee. These activities can include: (a) acting under the authority, or on behalf, of an AFS licensee; (b) acting under an intermediary authorisation; (c) providing administrative services; and Page 20 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 20 (d) providing services that are incidental to the operation of a licensed market or clearing and settlement facility (CS facility). Note: See Table 3 in the appendix for more details. Financial services that involve only the financial services provider RG 121.57 These exemptions apply where the financial service has some connection with the financial services provider itself. RG 121.58 They apply in the following situations: (a) the financial services provider deals on its own behalf or provides services to a related body corporate; (b) the financial service is provided in relation to a financial product that the financial services provider issues; (c) the financial service is provided in relation to an employee share scheme; (d) the financial services provider enters into certain dealings on its own behalf or on behalf of a related body corporate or associated entity in relation to an ACCU or EIEU; or (e) a trustee of an RSE deals in financial products in the ordinary course of the operations of that entity (other than a financial product that is an interest in the RSE). Note: See Table 4 in the appendix for more details. Alternative regulatory regime RG 121.59 These exemptions apply where the financial service is subject to adequate alternative regulation, such as the superannuation regulatory regime, or where people to whom financial services are provided would still have the protection intended by Parliament: see Table 5 in the appendix for more details. Financial services business is not the sole or principal purpose of the activity RG 121.60 These exemptions apply where: (a) carrying on the financial services business is not the sole or principal purpose of the activity; or (b) the predominant purpose of the product to which the service relates is not a financial product purpose. Note: See Table 6 in the appendix for more details. Page 21 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 21 Foreign collective investment schemes RG 121.61 Regulatory Guide 178 Foreign collective investment schemes (RG 178) outlines how we will use ASIC’s powers to facilitate the offer of interests in FCISs to Australian investors. It describes how and when we will we use our exemption powers to: (a) grant a person or company who operates an FCIS (FCIS operator) relief from the requirement to be licensed; (b) grant an FCIS operator relief from the requirement to register an FCIS where the interests are offered to Australian retail investors; and (c) enable an FCIS operator to make offers to Australian investors on the basis of a foreign regulated disclosure document. RG 121.62 In general, we will only give this relief if: (a) the FCIS and FCIS operator are regulated in their home jurisdiction under a sufficiently equivalent regulatory regime; and (b) there are effective cooperation arrangements between ASIC and the regulator in the home jurisdiction. Note: See Section B of RG 178. Page 22 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 22 E Obligations for AFS licensees Key points If you are required to hold an AFS licence in relation to a financial services business, you are subject to various general, conduct, disclosure, design and distribution obligations: see RG 121.67–RG 121.72. If you provide financial product advice to retail clients, you have additional obligations: see RG 121.73–RG 121.76. There are also obligations that apply directly to a person who provides financial services as a representative of an AFS licensee: see RG 121.77– RG 121.80. AFS licensee is ultimately responsible for all its financial services RG 121.63 A person who holds an AFS licence has obligations under the Corporations Act and their licence conditions, particularly if they deal with retail clients. These obligations include having a dispute resolution system and professional indemnity insurance, and training and supervising representatives (s912A and 912B). RG 121.64 An AFS licensee remains ultimately responsible for all financial services provided under its AFS licence, regardless of how those services are provided (s917B). RG 121.65 If you are a foreign entity that is not a foreign company registered under the Corporations Act, but you are an AFS licensee, you are obliged to have a local agent at all times who is authorised to accept service of process and notices on your behalf: regs 7.6.03A and 7.6.03B. RG 121.66 If you are an AFS licensee, you are also subject to various conduct and disclosure obligations. General AFS licensee obligations RG 121.67 As an AFS licensee, you must comply with the following general obligations under s912A and 912B: (a) do all things necessary to ensure that the financial services covered by your AFS licence are provided efficiently, honestly and fairly; (b) have adequate arrangements in place to manage your conflicts of interest; (c) comply with your AFS licence conditions; Page 23 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 23 (d) comply with the financial services laws; (e) take reasonable steps to ensure that your representatives comply with the financial services laws; (f) if the AFS licensee is the operator of, or has responsibilities in relation to, an Australian passport fund, comply with the law of each host economy; (g) comply with the Reference Checking and Information Sharing Protocol; (h) have available adequate resources; (i) maintain the competence to provide the financial services; (j) adequately train your representatives and ensure that they are competent to provide the financial services; (k) have a dispute resolution system if financial services are provided to retail clients; (l) have adequate risk management systems; and (m) have compensation arrangements if financial services are provided to retail clients. Note 1: RG 121.67(h) and RG 121.67(l) do not generally apply if you are a body regulated by the Australian Prudential Regulation Authority (APRA) within the meaning of s3(2) of the Australian Prudential Regulation Authority Act 1998. Note 2: For guidance on complying with these obligations, see Regulatory Guide 104 AFS licensing: Meeting the general obligations (RG 104) and Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees (RG 126). Note 3: ‘Reference Checking and Information Sharing Protocol’ is defined in s9. RG 121.68 The consumer protection provisions of the ASIC Act apply to prohibit a person from engaging in misleading or deceptive conduct in relation to financial services and prohibit unconscionable conduct. Under these provisions, a term in a consumer contract may also be rendered void if it is deemed unfair. Note: See Div 2 of Pt 2 of the ASIC Act for more details on the consumer protection provisions. Conduct obligations RG 121.69 As an AFS licensee, you may need to comply with various conduct obligations in Pts 7.6, 7.8 and 7.10 of the Corporations Act, including: (a) notifying ASIC of reportable situations; Note: Section 912DAA sets out the obligation to notify ASIC of reportable situations. For guidance on complying with this obligation, see Regulatory Guide 78 Breach reporting by AFS licensees and credit licensees (RG 78). (b) assisting us in our regulatory oversight of you as an AFS licensee; Page 24 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 24 (c) quoting your AFS licence number in documents; Note: See s912F and reg 7.6.01C. (d) complying with certain procedures when dealing with clients’ money and other property; and (e) keeping financial records and preparing and lodging financial statements. RG 121.70 AFS licensees are prohibited from engaging in market misconduct and other conduct that is contrary to the prohibitions in the Corporations Act. Note: See Pt 7.10 in relation to these prohibitions. Some of these obligations also apply to persons other than AFS licensees. Disclosure obligations RG 121.71 As an AFS licensee, you may also be subject to various disclosure obligations, including (but not limited to) giving a Financial Services Guide (FSG) to retail clients. Note: For information about complying with the FSG and other disclosure obligations in Pt 7.7, see RG 175. For further information about disclosure obligations regarding providing personal advice to retail clients, see Div 3 of Pt 7.7 and RG 175. Design and distribution obligations RG 121.72 AFS licensees that are issuers or distributers of financial products must comply with the design and distribution obligations in Pt 7.8A. Note: For more information about complying with the design and distribution obligations in Pt 7.8A, see Regulatory Guide 274 Product design and distribution obligations (RG 274). Additional obligations: Financial product advice to retail clients RG 121.73 There are additional obligations if you provide financial product advice to retail clients. These obligations vary depending on whether the advice is personal advice or general advice. Personal advice is financial product advice given or directed to a person (including by electronic means) in circumstances where: (a) the provider of the advice has considered one or more of the person’s objectives, financial situation and needs; or (b) a reasonable person might expect the provider to have considered one or more of those matters (s766B(3)). Page 25 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 25 RG 121.74 All other financial product advice is general advice. Note: For further information about the distinction between personal and general advice, see Section B of RG 175. RG 121.75 Generally, if you are the providing entity and the financial service is the provision of personal advice to a retail client, you must: (a) give the client a Statement of Advice (SOA), as defined in s9, if the value of the financial investments in relation to which the advice is provided exceeds $15,000 (s946A, 946AA(1)(a) and reg 7.7.09A); (b) act in the best interests of the client in relation to any advice given (s961B); (c) only provide advice to the client if it would be reasonable to conclude that the advice is appropriate to the client (s961G); (d) if it is reasonably apparent that information about the objectives, financial situation and needs of the client on which the advice is based is incomplete or inaccurate, warn the client that the advice is, or may be, based on incomplete or inaccurate information about the client’s relevant personal circumstances (s961H); and (e) if there is conflict between your interests, or those of an associate of yours, and the client’s interests, give priority to the client’s interests when giving the advice (s961J). Note 1: For further information about complying with additional obligations, see Section D of RG 175. Note 2: An SOA is not required for advice about small investments and where advice does not recommend the purchase or sale of products, when specific conditions are met: see s946AA and 946B, and reg 7.7.09A. Note 3: A SOA is not required for advice on specified products—for example, basic deposit products, related non-cash payment facilities, travellers’ cheques, cash management trusts or general insurance products: see reg 7.7.10. RG 121.76 If you provide general advice, you do not need to comply with the obligations referred to above. However, if the general advice is provided to a retail client and you are the providing entity you must warn the client that the advice does not consider their objectives, financial situation or needs: see s949A. Note 1: For further information about complying with this obligation, see Section B of RG 175. Note 2: We have granted relief to simplify the warning where oral general advice is provided to a retail client: see ASIC Corporations (Financial Services Guide, General Advice Warning and Advertising Related Relief) Instrument 2025/234. Note 3: In some circumstances, a general advice warning may not be required where general advice in relation to an issue or offer for sale is given on a billboard or poster or in the media: see reg 7.7.20. Page 26 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 26 When do representatives need to hold an authorisation? RG 121.77 In general, if you provide financial services in Australia as a representative of another person (a principal), you need to hold an authorisation under the Corporations Act from that principal (who must, in general, hold an AFS licence). You do not need to hold an authorisation if: (a) you are not providing financial services; (b) you are an employee or director of the principal (or a related body corporate of the principal) and the principal holds an AFS licence and the other requirements of s911B(1)(a) are satisfied; (c) you are an employee of an authorised representative of the principal, but only if the principal holds an AFS licence, the other requirements of s911B(1)(c) are satisfied and the financial service is the provision of: (i) a basic deposit product; (ii) a facility for making non-cash payments that is related to a basic deposit product; or (iii) a traveller’s cheque; (d) you are an AFS licensee providing the financial service under your own AFS licence (s911B(1)(d) and (3)); or Note: As an AFS licensee, you cannot be the authorised representative of another AFS licensee except in relation to a binder: see s916D and 916E. (e) the financial services you provide would be exempt under s911A(2) if they were instead provided by the principal (s911B(1)(e)). Note: We have given relief to allow AFS licensees who are authorised to deal in general insurance products to appoint distributors to deal in these products on their behalf without the need to appoint the distributors as authorised representatives: see ASIC Corporations (Basic Deposit and General Insurance Product Distribution) Instrument 2025/520. RG 121.78 Accordingly, if you provide financial services as a representative of an AFS licensee, you will generally need to hold an authorisation from that licensee (unless you are an employee or director of that licensee or a related body corporate). RG 121.79 Under s766A(4) a person is not regarded as operating a registered scheme merely because they act as an agent or employee of another person who does. This means that if an agent of the operator of a registered scheme merely acts in connection with the operation of the scheme and does not provide a financial service of a type referred to in s766A(1)(a)-(c) or (da)-(f), they will not have to hold an authorisation. Note: The responsible entity remains responsible for the acts of its agents: see s601FB(2). Page 27 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 27 What obligations are imposed on representatives? RG 121.80 The responsibility to ensure compliance with the financial services laws is primarily imposed on AFS licensees, who are responsible for the conduct of their representatives (as defined in s9). However, some obligations in the law apply directly to representatives, including (but not limited to): (a) the financial services disclosure obligations in Pt 7.7 where the representative is the providing entity (including the additional obligations relating to financial product advice described in the guidance at ‘Additional obligations: Financial product advice’ in Section E of RG 36; (b) the hawking prohibition in s992A; Note: For more information about the hawking prohibitions, see Regulatory Guide 38 The hawking prohibition (RG 38). (c) product distribution obligations under Pt 7.8A, where the representative is a ‘regulated person’ under s994A; Note: For more information about product distribution obligations, see RG 274. (d) some product disclosure obligations under Ch 6D (in the case of securities) or Pt 7.9 (in other cases); (e) the market misconduct and other prohibited conduct provisions in Pt 7.10; and (f) the consumer protection provisions in Div 2 of Pt 2 of the ASIC Act (e.g. the prohibition against misleading or deceptive conduct in s12DA). Note: Some of these obligations also apply to persons other than representatives. Page 28 REGULATORY GUIDE 121: Doing financial services business in Australia © Australian Securities and Investments Commission September 2024 Page 28 F Offering financial products in Australia Key points Disclosure obligations apply to offering a financial product to a retail client in Australia, even if you are not an AFS licensee. If you issue a financial product to a retail client, you may be required to provide the client with a PDS about the financial product, unless your activities fit within an exemption: see RG 121.84. If you offer securities (such as shares or debentures) to a retail client, you may be obliged to provide a prospectus rather than a PDS. Disclosure obligations that apply to offering financial products RG 121.81 If you have a business of issuing financial products and you wish to offer a financial product to a retail client in Australia, you may be obliged