ASIC RG 136 — ASIC Regulatory Guide – RG 136 Funds management: Discretionary powers

Page 1 REGULATORY GUIDE 136 Funds management: Discretionary powers June 2025 About this guide This guide is for operators of registered managed investment schemes (registered schemes), corporate collective investment vehicles (CCIVs) and passport funds, their service providers and advisers. It explains our approach to exercising ASIC’s exemption and modification powers to grant individual relief from requirements under the Corporations Act and, where relevant, the Corporations (Passport) Rules 2018 (Australian Passport Rules) for managed investment schemes and Australian passport funds. It also explains:  some of the more common situations when we have granted, and when we are likely to grant, relief; and  when we will consider managed investment schemes as closely related so that they should be aggregated in determining if some exemptions for small schemes apply. Page 2 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 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 guide was issued in June 2025 and is based on legislation and regulations as at the date of issue. Previous versions:  Superseded Regulatory Guide 136, issued July 2018  Superseded Policy Statement 136 Managed investments: Discretionary powers and closely related schemes, issued August 1998, reissued September 2000, rebadged as a regulatory guide 5 July 2007 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. Page 3 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 3 Contents A Overview .................................................................................................4 Purpose of this guide ...............................................................................4 Our related reports and guidance ............................................................5 B Our approach to individual relief .........................................................7 ASIC’s powers to grant relief ...................................................................7 Our general approach to relief under RG 51 ...........................................8 Our approach to relief for managed investment schemes and Australian passport funds ........................................................................8 Statutory preconditions for Australian Passport Rules relief .................11 C Common forms of individual relief ....................................................13 Compliance plan audits and compliance committees ...........................13 Stapled securities ..................................................................................18 Change of responsible entity .................................................................20 Offers to foreign members in a restructure ............................................24 Withdrawal arrangements ......................................................................24 Deregistration of a registered scheme ...................................................32 D Closely related schemes .....................................................................33 Section 601ED determination ................................................................33 Key terms .....................................................................................................35 Related information .....................................................................................39 Page 4 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 4 A Overview Key points This guide explains our approach to granting individual relief to managed investment schemes and Australian passport funds. It also explains: • some of the more common situations when we have granted, and when we are likely to grant, relief; and • when we will consider managed investment schemes as closely related so that they should be aggregated in determining if some exemptions for small schemes apply. Purpose of this guide RG 136.1 The creation, operation, termination and offer of interests in managed investment schemes is regulated under the Corporations Act 2001 (Corporations Act). Australian passport funds are also regulated by the Corporations (Passport) Rules 2018 (Australian Passport Rules). This guide explains our approach to granting individual relief from the requirements under the Corporations Act and the Australian Passport Rules to managed investment schemes and Australian passport funds. Note 1: Under s1211(2) of the Corporations Act, the Australian Passport Rules must be substantially the same as the Passport Rules set out in Annex 3 to the Memorandum of Cooperation on the Establishment and Implementation of the Asia Region Funds Passport (Memorandum of Cooperation). The Australian Passport Rules will be taken to be substantially the same when they, together with other provisions of the corporations legislation made by the responsible Minister, have substantially the same effect as the Passport Rules set out in Annex 3 to the Memorandum of Cooperation. Note 2: In this guide, references to sections (s), chapters (Chs) and parts (Pts) are to the Corporations Act, unless otherwise specified. RG 136.2 ASIC has discretionary powers under the laws we administer to: (a) exempt a person or a class of persons from particular provisions; and (b) modify the application of particular provisions to a person or class of persons. Note: The exemption or modification power may relate to all entities, a specified class of entities (which may include operators, custodians and auditors), or a specified class of funds or specified funds. RG 136.3 Our general approach to relief—that is, how and when we might grant an exemption from, or modification to, the laws we administer—is set out in Page 5 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 5 Regulatory Guide 51 Applications for relief (RG 51). RG 51 provides general guidance on: (a) the types of applications for relief that can be made; (b) how to submit an application for relief through the ASIC Regulatory Portal, and what information we may need from an applicant to consider the application; (c) our general approach to relief; and (d) the different types of relief that may be available. RG 136.4 This guide supplements our general policy in RG 51. It is intended to give greater transparency about how we exercise ASIC’s exemption and modification powers under the Corporations Act and the Australian Passport Rules for managed investment schemes and Australian passport funds. This includes: (a) some of the factors we may take into account in applying the principles under RG 51 when assessing applications for individual relief from the provisions in Chs 5C and 8A of the Corporations Act and the Australian Passport Rules (see Section B); and (b) the common types of individual relief we have granted to registered managed investment schemes (registered schemes) (see Section C); and (c) when we will consider managed investment schemes as closely related so that they should be aggregated in determining if some registration and product disclosure exemptions for small schemes apply (see Section D). Our related reports and guidance RG 136.5 We aim to provide a level of transparency about decisions we make when asked to exercise ASIC’s discretionary powers to grant relief. RG 136.6 We have also provided separate guidance on our approach to exercising ASIC’s discretionary powers to grant relief for specific topics that may be relevant to managed investment schemes and Australian passport funds. Table 1 lists some of this guidance and provides a brief explanation of what is covered in each guide. Table 1: Our related guidance on relief Guidance Description Regulatory Guide 43 Financial reports and audit relief (RG 43) Provides guidance on the relief available from financial reporting requirements in the Corporations Act Regulatory Guide 49 Employee incentive schemes (RG 49) Provides guidance on the relief available from the disclosure, Australian financial services (AFS) licensing, advertising, hawking, managed investment and on-sale provisions in the Corporations Act for an employee incentive scheme Page 6 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 6 Guidance Description Regulatory Guide 76 Related party transactions (RG 76) Provides guidance on the relief available from certain requirements in the Corporations Act, as well as guidance to promote better disclosure and governance for related party transactions Regulatory Guide 80 Managed investment schemes: Interests not for money (RG 80) Provides guidance on the relief available from the managed investment, AFS licensing, hawking and disclosure provisions of the Corporations Act for managed investment schemes that do not involve raising money Regulatory Guide 87 Charitable schemes and school enrolment deposits (RG 87) Provides guidance on the relief available from the fundraising, managed investment, debenture and AFS licensing provisions of the Corporations Act to charities that wish to raise funds by issuing debentures or interests in a managed investment scheme Regulatory Guide 91 Horse breeding schemes and horse racing syndicates (RG 91) Provides guidance on the relief available from the managed investment, AFS licensing and disclosure provisions of the Corporations Act for certain types of horse breeding schemes and horse racing syndicates Regulatory Guide 138 Foreign passport funds (RG 138) Provides guidance on ASIC’s powers and responsibilities as a host regulator under the Asia Region Funds Passport, as well as our requirements for notified foreign passport funds and their operators seeking to enter, or operating in, Australia Regulatory Guide 140 Strata schemes and management rights schemes (RG 140) Provides guidance on the relief available from the managed investment, AFS licensing and fundraising provisions of the Corporations Act for promoters and operators of management rights schemes and serviced strata schemes Regulatory Guide 144 Mortgage investment schemes (RG 144) Provides guidance on the relief available from certain Ch 5C provisions of the Corporations Act for mortgage investment schemes Regulatory Guide 148 Platforms that are managed investment schemes and nominee and custody services (RG 148) Provides guidance on the relief available from the managed investment, fundraising, disclosure and other investor rights requirements in the Corporations Act for operators of investor directed portfolio services (IDPSs) and responsible entities of IDPS-like schemes Regulatory Guide 160 Time-sharing schemes (RG 160) Provides guidance on the relief available from the managed investment and AFS licensing provisions of the Corporations Act for certain types of time-sharing schemes Regulatory Guide 161 Share and interest sale facilities (RG 161) Provides guidance on the relief available from the managed investment, AFS licensing and disclosure provisions in the Corporations Act for sale facilities and related purchase facilities Regulatory Guide 174 Relief for externally administered companies and registered schemes being wound up (RG 174) Provides guidance on the relief available from the financial reporting provisions of the Corporations Act for registered schemes being wound up Regulatory Guide 195 Group purchasing bodies for insurance and risk products (RG 195) Provides guidance on the relief available from the managed investment and AFS licensing provisions of the Corporations Act for group purchasing bodies Page 7 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 7 B Our approach to individual relief Key points This section explains how our general approach under RG 51 applies to granting individual relief from requirements under the Corporations Act and the Australian Passport Rules for managed investment schemes and Australian passport funds. RG 51 remains our primary guidance on our approach to individual relief applications. This section also explains some of the factors we may take into account in applying the principles under RG 51 when assessing applications for individual relief from the provisions in Chs 5C, 8A and 8B of the Corporations Act and the Australian Passport Rules. ASIC’s powers to grant relief RG 136.7 ASIC has powers under the Corporations Act to exempt a person or a class of persons from particular provisions and to modify the application of particular provisions to a person or class of persons. RG 136.8 Some of these powers of exemption or modification apply in relation to provisions that specifically affect managed investment schemes, corporate collective investment vehicles (CCIVs) and Australian passport funds only. These discretionary powers are to grant relief under: (a) s601QA from the provisions of Ch 5C (managed investment schemes) and from s253LA (special and extraordinary resolutions) as it relates to Ch 5C; (b) s1243 from certain provisions of Ch 8B (CCIVs); (c) s1217 from the provisions of Ch 8A (Australian passport funds); and (d) s1217A from the provisions of the Australian Passport Rules (Australian passport funds). RG 136.9 There are other exemption or modification powers under the Corporations Act that also apply. These include the discretionary exemption or modification powers in relation to: (a) the AFS licensing provisions (see s926A); (b) the financial services disclosure provisions (see s951B); (c) the conduct requirements relating to financial products and services (see s992B); and (d) the financial product disclosure provisions (see s1020F). Page 8 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 8 RG 136.10 If we grant an exemption or modification, the kind of relief granted, the extent of relief and the situations when relief applies will depend on what is appropriate in the circumstances. Our general approach to relief under RG 51 RG 136.11 RG 51 provides guidance on the types of applications for relief that can be made, how to submit applications through the ASIC Regulatory Portal, our general approach to applications and the types of relief available. RG 136.12 Under the general approach set out in RG 51, we will consider and determine all applications for relief on the basis of the facts, circumstances and merits of each individual application. Our approach to relief for managed investment schemes and Australian passport funds RG 136.13 When applying the general principles under RG 51 in the context of assessing applications for individual relief from the provisions in Chs 5C and 8A, we may take into account: (a) the result of a cost–benefit analysis and the impact of the relief sought on affected persons (see RG 136.14–RG 136.16); (b) the impact of the relief sought on the regulatory objectives of the managed investment regime and the Asia Region Funds Passport regime (see RG 136.17–RG 136.21); (c) the relevance of any precedents (see RG 136.22); (d) the relevance of the nature, scale and complexity of the managed investment scheme or Australian passport fund seeking relief, and its operator (see RG 136.23); and (e) the adequacy of any alternative regulation (see RG 136.24–RG 136.26). Note: This list is not exhaustive. Relevant considerations will always depend on the applicable facts, circumstances and merits of each individual application. The weight given to any particular item or any other relevant consideration will also depend on the circumstances. Cost–benefit analysis and impact on affected persons RG 136.14 When we undertake a cost–benefit analysis, we identify the persons whose interests may be affected (whether adversely or otherwise) if the relief sought is granted. RG 136.15 We then assess the likely impact of the relief sought on these affected persons. This involves evaluating the financial impact and ensuring we take into account all the relevant positive and negative consequences of granting relief. Page 9 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 9 RG 136.16 We may consider: (a) whether the persons who will be given the relief and others will receive any benefits from the exercise of ASIC’s relief powers, and to what extent; (b) whether strict compliance with the Corporations Act and the Australian Passport Rules will be impossible or disproportionately burdensome. This also involves identifying the persons bearing the costs; and (c) whether the likelihood and extent of detriment to potential clients (including retail clients) resulting from the relief sought is minimal. In part, this will involve considering whether people acquiring, holding or otherwise transacting interests in a managed investment scheme or an Australian passport fund will still have the protection intended by Parliament if the relief sought is granted. Impact on regulatory objectives RG 136.17 When we consider the impact on regulatory objectives, we may consider whether the relief sought promotes or is consistent with: (a) the general policy objectives of the Corporations Act; and (b) the specific policy objectives underlying the relevant provision(s) of the Corporations Act, and, where applicable, the Australian Passport Rules. RG 136.18 We will give appropriate weight to the value of promoting international harmonisation, where relevant. Corporations Act RG 136.19 Generally, the Corporations Act is intended to harmonise and raise standards of conduct. Managed investment schemes RG 136.20 Specific regulatory objectives for managed investment schemes include: (a) promoting commercial stability and efficiency in capital raising and capital formation; and (b) providing an appropriate level of regulation that adequately and effectively protects the interests of investors. Australian passport funds RG 136.21 Specific regulatory objectives for Australian passport funds include: (a) facilitating cross-border offerings of passport funds by supporting regulatory consistency across participating economies; Page 10 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 10 (b) providing adequate regulatory standards for the management and distribution of passport funds that promote investor protection, and fair, efficient and transparent markets; (c) providing Australian investors with a greater diversity of investment opportunities through the availability of interests in notified foreign passport funds; and (d) facilitating Australian fund managers seeking to offer their products and services in other participating economies. Relevance of any precedents RG 136.22 We may consider whether the relief sought involves the same or similar terms as any relief we have granted in comparable situations. We do so to promote consistency and predictability in our decision making when exercising ASIC’s statutory exemption and modification powers to grant relief. Note: See Section C for more information on common forms of relief we have granted. Nature, scale and complexity of the applicant and fund RG 136.23 We may also assess whether the relief sought is appropriate and necessary by considering the nature, scale and complexity of the applicant’s business operations. This includes the scope of the relief and any applicable conditions. At a minimum, we are likely to take into account: (a) the number of managed investment schemes and the size of their funds under management; (b) whether the fund is a managed investment scheme and whether it is also registered as an Australian passport fund; (c) the investment strategies and business activities of the managed investment scheme, including the extent to which the fund will use leverage; (d) whether the managed investment scheme is, or will be, listed or traded on a financial market; (e) the types of investments and investment locations; (f) the distribution model and investor base; (g) the activities, including the applicant’s investment approach; (h) the extent to which the applicant delegates material operational activities, and the level of oversight it has over its delegates; (i) the diversity and structure of the applicant’s operations (including the geographical spread of the operations and the extent to which any functions are outsourced); (j) the volume and size of the transactions the applicant is responsible for; Page 11 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 11 (k) whether the applicant’s main business is undertaking funds management; and (l) the number of staff in the applicant’s organisation. ‘Adequacy’ of alternative regulation RG 136.24 We may also consider whether there would be any available adequate alternative regulation or protection if the relief is granted. RG 136.25 This is aimed at both assessing the regulatory detriment of any relief and considering whether relief can be granted to remove any unnecessarily duplicated legislative or regulatory requirements. RG 136.26 When considering whether an alternative regulatory regime is ‘adequate’, we may generally consider how effectively the regime addresses: (a) efficient, honest and fair service provision; (b) service provider resources and competence; (c) service provider compliance, conflicts management and risk management practices; (d) initial and ongoing disclosure to retail clients about the provision of a service; (e) protection of client assets; (f) financial and transaction record keeping; (g) access by retail clients to internal and external dispute resolution services; and (h) the provision of any advice to retail clients on a reasonable basis. Statutory preconditions for Australian Passport Rules relief RG 136.27 We will only grant exemptions and modifications in relation to the Australian Passport Rules for an Australian passport fund (as its home regulator) if: (a) all of the relevant host regulators of the Australian passport fund have agreed to the terms of the relief sought (see RG 136.28–RG 136.31); and (b) we publish details of any relief granted (see RG 136.32–RG 136.33). Agreement of all relevant host regulators RG 136.28 An exemption or modification in relation to the Australian Passport Rules can only be granted for an Australian passport fund if all of the host regulators have agreed to the exemption being granted or the declaration Page 12 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 12 being made: see s1217A(3)(a). The host regulators are the passport regulators of the participating economies where the Australian passport fund is permitted, or has applied, to offer interests. RG 136.29 This requirement is aimed at promoting the consistent and seamless application of the Australian Passport Rules. RG 136.30 When we receive an application seeking relief from the Australian Passport Rules, we may seek to confirm any information provided with any relevant host regulator. We may also share the application with other passport regulators and seek their views. RG 136.31 The application will need to explain whether the applicant has obtained or is seeking agreement from each relevant host regulator for the relief sought. We may seek confirmation that agreement has been provided by the relevant passport regulators under the arrangements concerning cross-border supervisory cooperation under Annex 4 to the Memorandum of Cooperation. It is not possible for ASIC to grant relief from the Australian Passport Rules for an Australian passport fund until all relevant host regulators have agreed to the proposed relief. Exemptions and modifications to be made publicly available RG 136.32 If we grant an exemption or modification in our capacity as a home regulator for an individual Australian passport fund, its operator or a person responsible for compliance with a provision in the Australian Passport Rules, we will generally publish the details of the exemption or modification on the Asia Region Funds Passport Register. This includes any variation or revocation. Note: Where we grant an exemption or modification in relation to a class of funds, we will not publish these details on the Asia Region Funds Passport Register. RG 136.33 This requirement promotes transparency around how the Asia Region Funds Passport is being administered by all passport regulators. Page 13 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 13 C Common forms of individual relief Key points This section outlines and explains some of the more common forms of individual relief we have granted. The common forms of relief outlined in this section provide transparency around the material considerations we have taken into account in past decisions, so that prospective applicants for relief may have insight into the factors we consider when deciding whether to exercise ASIC’s powers to grant relief. We assess applications for relief on a case-by-case basis and consider all the relevant circumstances of each application. If we grant relief, it may be based on conditions other than what is set out in this section. Compliance plan audits and compliance committees RG 136.34 We may consider granting: (a) relief from the obligation to prepare and lodge a compliance plan audit; (b) an extension of time to establish a compliance committee; and (c) an extension of time to replace a compliance committee member. Relief from the compliance plan audit requirements RG 136.35 Under s601HG(1), the responsible entity of a registered scheme must ensure that, at all times, a registered company auditor, an audit firm or an authorised audit company is engaged to audit compliance with the scheme’s compliance plan. RG 136.36 Section 601HG(3) sets out the auditor’s powers and responsibilities, which are to: (a) examine the compliance plan; (b) audit compliance by the responsible entity with the compliance plan; and (c) report to the responsible entity on whether the responsible entity has complied with the compliance plan during the financial year and whether the plan continues to meet the requirements of Pt 5C.4. RG 136.37 The auditor of the compliance plan must lodge with ASIC the compliance plan audit report at the same time as the financial statements and reports for the registered scheme: see s601HG(7). Page 14 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 14 RG 136.38 The purpose of a compliance plan audit is to identify whether there has been any non-compliance with the compliance plan by the responsible entity, and whether the plan continues to meet the requirements of Pt 5C.4. RG 136.39 We would generally only consider an application for individual relief from the requirement to conduct a compliance plan audit and lodge a compliance plan audit report with ASIC for a financial year if the responsible entity has: (a) complied with its compliance plan for the financial year to be covered by the relief sought; (b) not had any significant reportable breaches for the financial year to be covered by the relief sought; (c) lodged its compliance plan audit reports for previous financial years; and (d) provided us with information on any concerns raised by an auditor in previous compliance plan audit reports. RG 136.40 The requirement for a compliance plan audit is a fundamental obligation of the managed investment regulatory regime. It provides that adequate processes are in place to ensure that a registered scheme is operated in accordance with the obligations contained in the constitution and the law. It also ensures that the compliance plan meets the requirements of Pt 5C.4. RG 136.41 We would generally only grant relief from a requirement under s601HG if a person could demonstrate that meeting the compliance plan audit provisions would be impossible or disproportionately burdensome in the circumstances—for example, if a scheme is being wound up or, for a short period, pending deregistration. RG 136.42 Factors we may consider when deciding whether to grant relief include: (a) whether the benefits of conducting the compliance plan audit and preparing the compliance plan audit report are outweighed by the associated burden and costs. When we consider the benefits, we will take into account the likely relevant users of such reports and the likely nature and extent of their use. When we consider the costs and burden, we will take into account the amount and who will bear the expected compliance costs; (b) the ability of the likely relevant users of such information to independently obtain, in a timely manner, other reliable information on the registered scheme’s compliance; and (c) the underlying purposes of a compliance plan audit and audit report as set out at RG 136.38 and RG 136.40. RG 136.43 We will generally include a condition on any relief that requires the responsible entity to publish a notice explaining the relief in a prominent place on its website. Page 15 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 15 Extension of time for compliance committee establishment RG 136.44 Under s601JA(1), the responsible entity of a registered scheme must establish a compliance committee if ‘less than half of the directors of the responsible entity are external directors’. Note: Section 601JA(2) provides a definition of an ‘external director’. RG 136.45 The responsible entity must establish the compliance committee within 14 days after it is required to do so under s601JA(1), unless we have agreed in writing to a longer period: see s601JA(3). In agreeing to a longer period, we may include conditions that the responsible entity must comply with. RG 136.46 We will consider granting an extension of time to establish a compliance committee if: (a) there are exceptional circumstances that justify relief; or (b) it may be impractical to establish a committee with a sufficient number of external members within the 14-day period for reasons other than due to the responsible entity’s default. RG 136.47 However, we are generally not likely to grant an extension of time to establish a compliance committee when a responsible entity is registering a scheme. The responsible entity should not apply for registration unless it is in a position to establish a board or compliance committee immediately after the scheme is registered. RG 136.48 Factors we may consider when deciding whether to grant relief include whether: (a) the responsible entity is doing all it can reasonably do to appoint sufficient external directors or to establish a compliance committee; and (b) any reduction in investor protection from the lack of a compliance committee is minimised. RG 136.49 If an extension of time is granted, we will generally include conditions on the responsible entity requiring it to: (a) use its best endeavours to establish the compliance committee or appoint the required external directors to the board of the responsible entity as soon as practicable, and, in any event, before the extended time limit ends; and (b) appoint external auditors to carry out substitute compliance monitoring for the period of relief. RG 136.50 Extensions will be given only for a specified period and for as long as appears necessary. Page 16 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 16 Compliance committee membership RG 136.51 Under s601JB(1), a compliance committee must have at least three members, and a majority of them must be ‘external members’. Note: ‘External members’ is defined under s601JB(2) and qualified by s601JB(3) and (4). RG 136.52 The need for a compliance committee may also arise due to changes in the composition of the board of the responsible entity and an extension of time may be sought to reconstitute the board with sufficient external directors. RG 136.53 We consider it is important that vacancies in the external members of a compliance committee are filled quickly so that investor protection is not reduced. Similarly, if at least half of the directors of a responsible entity are not external, a compliance committee should be established quickly. This is because a compliance committee with a majority of external members gives investors protection by regularly monitoring compliance. RG 136.54 There will be costs associated with finding appropriate external compliance committee members. However, this is an intended cost associated with establishing appropriate investor protection and the responsible entity should factor it into budgets at an early stage. RG 136.55 The Corporations Act imposes significant restrictions on who may be an external member of a compliance committee or of the board of the responsible entity. We consider that a member of a compliance committee must be a natural person. An external member must not be, and may not within the previous two years have been, substantially involved in business dealings or involved in a professional capacity with the responsible entity or a related body corporate: see s601JB(2)(b). These restrictions reflect the importance for investor protection and credibility of regulation—for there to be oversight by persons who are manifestly independent. RG 136.56 In our view, the reference to ‘substantially involved’ means that a person who is employed by an entity that has had business dealings or a professional relationship with the responsible entity, or a related body corporate of the responsible entity, would not be excluded as an external member or director merely because they have had a trivial involvement with the dealings of, or a trivial relationship with, the entity. We also consider the term ‘substantial’ qualifies the degree of an individual’s involvement, rather than the nature of the business dealings or professional relationship. In our view, the provisions should not be interpreted as meaning involvement in substantial business dealings. RG 136.57 We consider the following persons are likely to be substantially involved in business dealings or in a professional capacity with the responsible entity: (a) an employee of the auditor of the responsible entity who: (i) has decision-making responsibility in relation to audits of the responsible entity; or Page 17 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 17 (ii) may have been exposed to any form of conflict of interest in acting as a compliance committee member because of involvement with the audits; (b) an employee or officer of a custodian for the responsible entity who: (i) has decision-making responsibility in relation to the dealings between the custodian and the responsible entity; or (ii) may have been exposed to any form of conflict of interest in acting as a compliance committee member because of their involvement in the business relationship with the responsible entity; or (c) a solicitor who is responsible for legal advice provided to the responsible entity. RG 136.58 A member of a partnership with a substantial involvement is also not eligible as an external member: see s601JB(2)(c). RG 136.59 The requirements for being external are intentionally strict and are designed to ensure the unambiguous appearance of independence, as well as actual independence. Because of this, we will generally not grant relief that allows a person who may not be external to be counted as external. We will generally not grant relief on the basis of submissions that: (a) there is no actual conflict of interest—for example, a partner of a firm of solicitors who has no business dealings with the responsible entity in the case where the firm has substantial involvement in business dealings with the responsible entity; or (b) there are difficulties in finding alternative candidates. RG 136.60 Under s601JB(5), if the compliance committee ceases to satisfy the membership requirements under s601JB(1), the responsible entity must make appointments to the committee within 14 days after this requirement is no longer satisfied. This is unless we have agreed in writing to a longer period. Our consent to a longer period may be made subject to conditions and there is a statutory obligation on the responsible entity to comply with those conditions: see s601JA(6). RG 136.61 When a responsible entity needs to constitute or reconstitute a compliance committee after a scheme is registered, we recognise that it may be impracticable to find suitable compliance committee members within 14 days. For example, this may be difficult on the sudden death of an external member of the compliance committee or board of the responsible entity. It may be especially difficult for smaller, specialised registered schemes and schemes based in remote locations. Similarly, when multiple vacancies occur in a compliance committee, we recognise that compliance is more likely to be impracticable. Page 18 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 18 RG 136.62 The responsible entity should apply promptly after it appears that an extension is likely to be necessary. We may, however, extend the time after the end of the 14-day period. RG 136.63 We will consider granting an extension of time if: (a) there are exceptional circumstances to justify relief; or (b) it may be impractical to appoint a sufficient number of external members within the 14-day period for reasons other than due to the responsible entity’s default. Note: See RG 136.61 for examples. RG 136.64 Factors we may consider when deciding whether to grant relief include whether: (a) the responsible entity is doing all it can reasonably do to appoint the external member(s); and (b) any reduction in investor protection due to the compliance committee not having the required member composition is minimised. RG 136.65 If an extension of time is granted, we will generally include conditions on the relief that require the responsible entity to: (a) use its best endeavours to appoint the required external member(s) to the compliance committee. This must be as soon as practicable, and, in any event, before the extended time limit ends; and (b) ensure that the number of external members as a proportion of the total number of members of the compliance committee does not become less than the proportion at the date the application for relief was made. Stapled securities RG 136.66 Section 601FC(1) prescribes the duties of the responsible entity. This includes to: (a) act in the best interests of members (see 601FC(1)(c)); and (b) not make use of information in order to gain an advantage for itself and/or any other person or cause detriment to the members of the scheme (see s601FC(1)(e)). RG 136.67 Similar duties apply to the officers of the responsible entity: see s601FD(1)(c) and 601FD(1)(d). Section 601FD(1)(e) imposes a duty on officers of the responsible entity not to make improper use of their position as an officer to gain an advantage for themselves and/or any other person or to cause detriment to members of the scheme. Page 19 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 19 RG 136.68 There is also a duty for employees of the responsible entity not to make improper use of their position as an employee to gain an advantage for themselves and/or any other person or to cause detriment to members of the scheme: see s601FE(1)(a). RG 136.69 Section 601LC prohibits the giving of financial benefits by a responsible entity to a related party of the responsible entity unless a relevant exception is available. RG 136.70 We may consider granting relief for stapled securities, a component of which is an interest in a registered scheme, from the following provisions: (a) s601FC(1)(c) and 601FC(1)(e)—to allow a responsible entity to consider the interests of the members or to use information, having regard to them being stapled security holders; (b) s601FD(1)(c), 601FD(1)(d), 601FD(1)(e) and 601FE(1)(a)—to allow officers or employees to consider the interests of the members or to use information or their position, having regard to them being stapled security holders; and (c) s601LC—to allow a responsible entity to give a financial benefit to itself or a related party where this increases stapled scheme property, while decreasing the property in the registered scheme. RG 136.71 We may consider granting relief for stapled securities where: (a) the stapled group consists of two or more financial products, including at least one interest in a registered scheme. This is where: (i) under the terms on which each of the products is to be traded, they must be transferred together; and (ii) there are no financial products in the same class as those financial products that may be transferred separately; and (b) each interest in the scheme must, under the terms upon which it is to be traded, only be transferred with one or more shares or interests. RG 136.72 We may grant relief for stapled securities to facilitate the operation and management of the stapled group, rather than the component parts that make up the stapled group. We consider there is no detriment to members given they are also members of the other component parts of the stapled group. RG 136.73 Factors we may consider when deciding whether to grant relief for stapled securities include: (a) whether all interests in the registered scheme remain stapled with shares in a company (or interests in another scheme) on a one-for-one basis, and are traded as stapled securities; Page 20 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 20 (b) whether there is any ‘leakage’—that is, whether the stapled security holders own all of the shares in the stapled company and no benefit leaks from the stapled structure for the benefit of others; and Note: Benefits may be able to be paid from the scheme property to wholly-owned subsidiaries of a company that is wholly owned by the stapled security holders. (c) where the stapling occurs after members have acquired an interest in the scheme, we may request a copy of the proposed disclosure to be sent to members about resolutions to staple, to ensure that the disclosure is adequate. Change of responsible entity RG 136.74 If the responsible entity of a registered scheme wants to retire, it must call a members’ meeting to explain its reasons for wanting to retire and to enable the members to vote on a resolution to choose a new responsible entity: see s601FL(1). The resolution must be an extraordinary resolution if the scheme is not listed. RG 136.75 Section 601FL provides registered scheme members with the opportunity to exercise voting rights to choose a new responsible entity to replace a retiring responsible entity. In our view, this is an important safeguard for the change of responsible entity, which cannot be effected by too few members. RG 136.76 We may consider granting relief from the requirement to hold a members’ meeting for a change of responsible entity if: (a) the change is to a related body corporate of the responsible entity (see RG 136.77–RG 136.79); (b) there are a small number of members (see RG 136.80–RG 136.83); or (c) a significant percentage of the interests in the registered scheme are held by investment platforms that have a non-voting policy (see RG 136.84–RG 136.87). Change to a related body corporate RG 136.77 We will consider granting relief from the requirement to hold a members’ meeting for a change of responsible entity if: (a) the existing responsible entity and the proposed new responsible entity are related companies and the change of responsible entity is unlikely to have an adverse impact on the administrative, custodial or asset management of the registered scheme or give rise to any significant changes in the manner in which the scheme operates; and (b) the existing responsible entity and the proposed new responsible entity are related companies and the costs of strict compliance with the meeting requirements under s601FL(1) are disproportionately burdensome compared to the benefits of holding a meeting. Page 21 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 21 RG 136.78 Factors we may consider when deciding whether to grant relief include whether: (a) the current and replacement responsible entity are related companies within the same corporate group; (b) the current and replacement responsible entity share or have the following in common: (i) resources (including key staff); (ii) corporate governance arrangements (particularly directors and compliance committee members); and (iii) control structures (e.g. reporting lines, compliance systems and procedures for monitoring service providers, and accounting, computer and IT systems); (c) if relief is granted, there would be any adverse impact on members’ interests; (d) if relief is granted, there would be substantial cost savings for the responsible entity, and, ultimately, for the members of the registered scheme; and (e) it is possible for the members’ meeting to be held as a virtual-only meeting under s252P(c) or as a hybrid meeting under s252P(b). Note: For further information on virtual meetings, see FAQs: Virtual meetings for companies and registered schemes on the ASIC website. RG 136.79 If relief is granted, we will generally include conditions on the relief that require the responsible entity to: (a) notify members of the proposed change of responsible entity and include in the notice all the information that members would reasonably need to make an informed assessment as to whether to request an all- member vote to choose a new responsible entity; (b) give members 21 days to consider the notice and, if they wish, request that the responsible entity hold an all-member postal vote to choose a new responsible entity; (c) conduct a postal vote (based on the conditions set out in the relief) if 100 members or members holding at least 5% of the total value of interests held by members eligible to vote request one; and (d) effect the change of responsible entity within three months. Small number of members RG 136.80 We may consider granting relief from the requirement to convene and hold a members’ meeting to change a responsible entity if: (a) there are only a small number of members and all of those members would be prevented from voting under s252R or 253E; or Page 22 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 22 (b) the only members are a small number of wholesale clients. RG 136.81 We may grant this relief to facilitate members being able to approve a change of responsible entity when: (a) it may not be possible to convene and hold a meeting of members; or (b) due to the small number of members, the costs and effort of doing so are unnecessary—on the basis that the consent of members to the change of responsible entity can be obtained in a more cost-effective way. RG 136.82 Factors we may consider when deciding whether to grant relief include whether: (a) the registered scheme is able to meet the quorum requirement of two members under s252R; (b) all members would be unable to pass a resolution to change the responsible entity in a members’ meeting because they would be prevented from voting on the resolution under s253E; Note: Section 253E provides that the responsible entity of a registered scheme and its associates are not entitled to vote on a resolution at a members’ meeting if either the responsible entity or the associate has an interest in the resolution or matter other than as a member. This restriction applies to the resolutions for retirement and replacement of the responsible entity under s601FL. (c) the registered scheme would incur unnecessary costs and inconvenience to convene and hold a members’ meeting; and (d) it is possible for the meeting to be held virtually or as a hybrid meeting. RG 136.83 If relief is granted, we will generally include conditions on the relief that require: (a) the responsible entity to give members materials dealing with the change of responsible entity which are similar to the explanatory memorandum that would have been provided with a notice of meeting; and (b) unanimous member approval to ensure that there is no reduction of members’ rights because this is a higher threshold for member approval than that required by s601FL. Investment platforms that have a non-voting policy RG 136.84 Member approval for a change of responsible entity may be difficult to obtain when a significant proportion of the interests in the registered scheme are held by investment platforms that have a policy of not voting. This may make it difficult to obtain the requisite number of members to vote on a change of responsible entity. This is particularly relevant for unlisted schemes that require a change to be approved by an extraordinary resolution. Note: For more information on investment platforms and the requirements for them to have and disclose a voting policy, see RG 148. Page 23 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 23 RG 136.85 We will consider granting relief from s601FL(1) to facilitate a change of responsible entity when a significant percentage of the interests in the registered scheme are held by investment platforms that have a written policy of not voting, and so abstain from voting. We will generally do this by excluding these platform interests from the total votes that may be cast under an extraordinary resolution. RG 136.86 Factors we may consider when deciding whether to grant relief include whether: (a) the applicant provides evidence of the published voting policy of the relevant platform which demonstrates that the platform has a policy of not voting; Note: For example, for an IDPS, we would ordinarily request the relevant extract from the IDPS Guide. (b) all members had the opportunity to vote on the resolution, subject to the self-imposed voting practices of the platform operators that have a written policy of not voting; (c) the responsible entity has demonstrated that it is not possible for a sufficient number of members to vote on the resolution after having held a members’ meeting to consider the proposed resolution; (d) the platform operators have undertaken consultation with their own underlying clients about the proposed resolution; (e) the impact on members as a result of the change of responsible entity will be limited; and (f) there are other commercial benefits that would flow from granting relief, including any cost savings of pursuing alternatives and avoiding the entrenchment of a responsible entity that seeks to retire. RG 136.87 If relief is granted, we have generally included conditions on the relief that require the responsible entity to: (a) notify all members in writing that if a platform operator has a policy of not voting and abstains from voting, the vote will exclude the members that are holding for platforms; (b) ensure a reasonable period of time passes before the meeting can be reconvened and the vote counted (which would then exclude the votes of any non-voting platforms); and (c) ensure members who have previously submitted proxies for the original meeting may, for a period of at least 10 business days, withdraw or change their proxies after they have been given notice of the adjourned meeting. Page 24 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 24 Offers to foreign members in a restructure RG 136.88 Under s601FC(1)(d), a responsible entity has a duty to treat members who hold interests of the same class equally and members who hold interests of different classes fairly. RG 136.89 We will consider granting relief from s601FC(1)(d) so that foreign members in a registered scheme can be treated differently from other members. We will generally do this if it is impracticable or unlawful to offer or issue interests to foreign members as part of a restructure of the scheme or similar proposal involving the scheme. RG 136.90 Factors we may consider when deciding whether to grant relief include whether: (a) the foreign members would have an equal opportunity to vote on the proposal; (b) it would be disproportionately burdensome for the responsible entity to comply with foreign fundraising laws due to: (i) the number of foreign jurisdictions involved; and (ii) there being a relatively small number and percentage of foreign members of the registered scheme; (c) any relevant costs of complying with such laws would be borne by all members of the registered scheme; and (d) the foreign members receive cash or are entitled to participate in a cash- out facility to dispose of their existing interests, which other members receive. RG 136.91 If relief is granted, we will generally include conditions on the relief that require the responsible entity to: (a) fully inform foreign members of the proposed transaction; and (b) give foreign members an equal opportunity to vote on the proposed transaction. Withdrawal arrangements RG 136.92 We may consider granting relief to enable: (a) withdrawal on hardship grounds from ‘frozen funds’ (see RG 136.93– RG 136.104); (b) ‘rolling’ withdrawal offers (see RG 136.105–RG 136.115); and (c) registered schemes that provide marketplace lending products to offer withdrawals when the scheme is non-liquid (also known as ‘illiquid’) (see RG 136.116–RG 136.119). Page 25 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 25 Hardship relief for ‘frozen funds’ RG 136.93 There are restrictions on members withdrawing from registered schemes: see s601KA(3). The responsible entity of a registered scheme must not allow a member to withdraw from a liquid scheme other than in accordance with the scheme’s constitution. They also must not allow a member to withdraw from an illiquid scheme other than in accordance with the scheme’s constitution and s601KB–601KE. RG 136.94 The responsible entity of a registered scheme must also treat the members who hold interests of the same class equally and members who hold interests of different classes fairly: see s601FC(1)(d). Relief available under ASIC Corporations (Hardship Withdrawals Relief) Instrument 2020/778 RG 136.95 We have provided hardship relief so that responsible entities can allow members suffering hardship to withdraw from a ‘frozen fund’: see ASIC Instrument 2020/778. For the purposes of the relief, a ‘frozen fund’ is a registered scheme for which the responsible entity for the scheme has both: (a) suspended withdrawals from the scheme, whether or not the scheme is liquid; and (b) ceased to allow the issue of new interests in the scheme. RG 136.96 The instrument provides responsible entities with relief in relation to: (a) the duty to treat members of the same class equally (under s601FC(1)(d)); (b) the withdrawal regime (under Pt 5C.6), by introducing a new hardship withdrawal regime; and (c) the requirement that a special resolution of members must approve a constitutional change (under s601GC(1)(a)). A responsible entity will be allowed to change the scheme’s constitution unilaterally to include provisions for a right of members to withdraw on hardship grounds following notice to members. However, if it receives requests to hold a meeting from members with at least 5% of the votes that may be cast, it must hold the meeting. Note: For the avoidance of doubt, relief is also granted from the constitution content requirements under s601GA(4) given the discretion that is available to the responsible entity under the new hardship withdrawal regime. RG 136.97 Under the relief, a responsible entity has the discretion to make a withdrawal payment to a person who is a member, the beneficiary of the member’s estate or an instructor (e.g. a member of the scheme making the request for a person in their capacity as responsible entity or custodian of another registered scheme) in response to a withdrawal request by the person. However, the withdrawal request must meet one of the hardship criteria set out in Table 2. Page 26 REGULATORY GUIDE 136: Funds management: Discretionary powers © Australian Securities and Investments Commission June 2025 Page 26 Table 2: Hardship criteria a person must meet for a hardship withdrawal Type of hardship Hardship criteria Urgent financial hardship The person needs the amount requested to meet reasonable and immediate living expenses for the person or any dependants. Unemployment The person has not been in gainful employment for at least three months and has no other means of financial support (except government assistance, such as unemployment benefits). Compassionate grounds The person (or their dependant, as applicable) needs the amount requested to:  pay for medical costs (including related transport costs) to treat a life-threatening illness or injury, to alleviate acute or chronic pain, or to alleviate an acute or chronic mental disturbance. A registered medical practitioner must provide a certified statement confirming the medical condition;  pay for specific modifications to a principal place of residence or vehicle to accommodate a severe disability of the person or their dependant;  pay for funeral and other expenses related to the death of a member (paid to a beneficiary of the estate of the deceased member) or the death of a dependant of the person;  enable the person to provide care for another person who is dying from a terminal illness, including home care;  prevent a mortgagee or lender from selling the person’s principal place of residence; or  meet a binding financial obligation entered into by the person before the responsible entity suspended withdrawals (other than hardship withdrawals, if any). The person or their dependant must not otherwise have the financial capacity to m