ASIC RG 138 — ASIC Regulatory Guide – RG 138 Foreign passport funds

Page 1 REGULATORY GUIDE 138 Foreign passport funds November 2024 About this guide This guide is for foreign passport fund operators seeking to enter, or operating in, Australia under the Asia Region Funds Passport—a multilaterally agreed framework to facilitate the cross-border marketing of managed funds across participating economies in the Asia region. It explains our approach as a host regulator to the regulation of foreign passport funds in Australia, including:  the entry requirements to become a ‘notified foreign passport fund’;  ongoing requirements for notified foreign passport funds; and  the process for removing notified foreign passport funds (denotification). It also explains ASIC’s powers and responsibilities in relation to notified foreign passport funds and their operators, including our discretionary powers to grant exemptions and modifications to the Corporations (Passport) Rules 2018 (Australian Passport Rules). Page 2 REGULATORY GUIDE 138: Foreign passport funds 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 November 2024 and is based on legislation and regulations as at the date of issue. In April 2026, we made amendments to reflect renamed Regulatory Guide 168 Product Disclosure Statements: Disclosure and other obligations, remove out-of-date information and reflect current style and drafting practices. Previous versions:  Superseded Regulatory Guide 138, issued July 2018, reissued September 2018 Disclaimer This guide does not constitute legal advice.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 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 3 Contents A Overview ........................................................................................... 4 The Asia Region Funds Passport ...................................................... 4 Requirements for foreign passport funds and their operators ........... 6 Our role .............................................................................................. 7 B Entry requirements .......................................................................... 9 Steps to take before submitting a notice of intention ......................... 9 Completing and submitting a notice of intention .............................. 13 Our assessment of a notice of intention .......................................... 14 When can interests be offered in Australia? .................................... 19 Information on the Asia Region Funds Passport Register .............. 19 C Ongoing requirements .................................................................. 21 Registered foreign company obligations ......................................... 21 AFS licensing obligations ................................................................. 26 Product Disclosure Statement (PDS) disclosure requirements ....... 28 Confirmation of transactions ............................................................ 36 Cooling-off rights .............................................................................. 36 Prohibition of conflicted and other banned remuneration ................ 37 Advertising of notified foreign passport fund interests ..................... 38 Register of members ....................................................................... 39 Ongoing disclosure of material changes and significant events...... 40 Periodic statements ......................................................................... 42 Financial reports and auditors’ reports ............................................ 43 Providing additional information about the interest on request ....... 44 Providing copies of books on court order ........................................ 47 Lodgement of documents with ASIC ............................................... 47 Breach reporting to ASIC ................................................................. 53 Complaints by Australian retail clients ............................................. 57 Levies for notified foreign passport fund operators ......................... 58 D Denotification requirements ......................................................... 61 Types of denotification ..................................................................... 61 Process of denotification.................................................................. 62 Effect of denotification ..................................................................... 62 E ASIC’s powers and responsibilities ............................................. 64 Our discretionary powers to grant exemptions and modifications ... 64 Our approach to recognising exemptions and modifications granted by other passport regulators ............................................................ 66 Our obligations with personal or confidential information ................ 67 Our approach to non-compliance .................................................... 70 When can we make a stop order? ................................................... 71 When can we take civil action?........................................................ 72 When can we issue an infringement notice? ................................... 73 When can we accept a court enforceable undertaking? ................. 74 When can we take criminal prosecution action? ............................. 74 Review of ASIC decisions................................................................ 75 Key terms ............................................................................................... 77 Related information ............................................................................... 84 Page 4 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 4 A Overview Key points The Asia Region Funds Passport allows passport funds established and regulated in one participating ‘home economy’ to offer interests to investors in another participating ‘host economy’. To do this, passport fund operators must comply with entry and ongoing requirements under the Passport Rules agreed between the participating economies and incorporated in each participating economy’s law. ASIC and our fellow passport regulators have established arrangements for cooperation and information sharing in administering the Asia Region Funds Passport. The Asia Region Funds Passport RG 138.1 The Asia Region Funds Passport provides a multilaterally agreed framework to facilitate the cross-border marketing of managed funds across participating economies in the Asia region with limited additional regulatory requirements. RG 138.2 The Memorandum of Cooperation on the Establishment and Implementation of the Asia Region Funds Passport (Memorandum of Cooperation) is published on the Asia Region Funds Passport website. It contains, in Annex 3, the Passport Rules agreed between the participating economies for implementing the Asia Region Funds Passport. Each participating economy has committed to incorporate the Passport Rules into their respective domestic laws. Note 1: Under s1211(2) of the Corporations Act 2001 (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. 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. Note 3: See the ‘Key terms’ at the end of this guide for an explanation of the terms used in this guide. RG 138.3 The Asia Region Funds Passport enables an operator of a foreign passport fund established and regulated in one participating home economy to offer interests to persons in another participating host economy. This is so long as the applicable legal and regulatory requirements of the host economy are met, including the host economy Passport Rules. Page 5 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 5 RG 138.4 The aim of the Asia Region Funds Passport is to promote investment between the participating economies by removing unnecessary regulatory barriers and reducing the cost of raising capital in all participating economies. The Asia Region Funds Passport also maintains investor protection through supervision and regulation of offerings, and the application of host economy laws in certain areas. RG 138.5 This guide will help foreign passport fund operators and their advisers understand our approach to the regulation of ‘notified foreign passport funds’ in Australia. Note: A notified foreign passport fund is a foreign passport fund that has become a notified foreign passport fund under s1213C. RG 138.6 The requirements we administer for foreign passport fund operators seeking to enter, or operating in, the Australian market under the Asia Region Funds Passport are contained in: (a) the Corporations Act; (b) the Australian Passport Rules; (c) the Australian Securities and Investments Commission Act 2001 (ASIC Act); (d) the Corporations Regulations 2001 (Corporations Regulations); (e) the Australian Securities and Investments Commission Regulations 2001 (ASIC Regulations); (f) the ASIC Supervisory Cost Recovery Levy Regulations 2017; and (g) legislative instruments made under the Corporations Act. RG 138.7 There are other requirements under Australian law that may apply, which are administered by other Australian Government agencies and are not covered in this guide. These include requirements relating to: (a) taxation—see the Australian Taxation Office (ATO) website; (b) members’ privacy—see the Office of the Australian Information Commissioner website; (c) competition—see the Australian Competition and Consumer Commission website; (d) anti-money laundering and counter-terrorism financing—see the Australian Transaction Reports and Analysis Centre website; and (e) foreign acquisition of interests in Australian real estate or business—see the Foreign Investment in Australia on the Treasury website. RG 138.8 Australian state and territory governments may also levy taxes, such as ‘stamp’ duties on the execution of particular documents. Notified foreign passport funds, their operators and agents, and any person appointed to act on behalf of these entities, may be liable to pay these taxes. Page 6 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 6 Requirements for foreign passport funds and their operators RG 138.9 Australian financial services (AFS) licensing, conduct and disclosure obligations in the Corporations Act apply to entities when carrying on a financial services business in Australia. These obligations generally apply in the same way to Australian and non-Australian entities. RG 138.10 Under the Asia Region Funds Passport, foreign passport fund operators seeking to carry on a financial services business of issuing interests in a notified foreign passport fund to persons in Australia are exempt from some requirements in the Corporations Act that would normally apply. RG 138.11 Foreign passport fund operators seeking to issue interests in a notified foreign passport fund in Australia under the Asia Region Funds Passport may take one of two approaches. They can: (a) offer and sell directly to Australian investors; or (b) offer and sell through an AFS licensee that is authorised to offer interests for sale, or a representative of this AFS licensee (an ‘authorised representative’). RG 138.12 If a foreign passport fund operator decides to offer interests directly to persons in Australia, the operator must hold an AFS licence and meet the general obligations of AFS licensees. Note: For more information, including on our eLicensing system, see Applying for and managing an AFS licence on the ASIC website. See also Regulatory Guide 121 Doing financial services business in Australia (RG 121). RG 138.13 If a foreign passport fund operator uses an AFS licensee or its authorised representative to offer interests in Australia (a distributor), the operator does not need to hold an AFS licence. This is so long as the offer is covered by the AFS licensee’s licence: see s911A(2)(b). Notified foreign passport fund requirements RG 138.14 Whether offering and selling interests directly to Australian investors, or through a distributor, a foreign passport fund operator must not offer interests in the foreign passport fund unless it is a notified foreign passport fund: see s1213C. RG 138.15 For a foreign passport fund to become a notified foreign passport fund, its operator must submit a ‘notice of intention’ to ASIC to offer fund interests in Australia. The foreign passport fund will become a notified foreign passport fund if, by the end of the consideration period: (a) we have not told the operator that required information has not been provided; (b) we have not rejected the notice of intention; and/or (c) the notice of intention has not been withdrawn. Page 7 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 7 Note: The consideration period is 15 business days beginning on the day after a notice of intention is lodged with ASIC, or any extended period we have agreed with the foreign passport fund operator—see s1213D. RG 138.16 The entry requirements to become a notified foreign passport fund, ongoing requirements for notified foreign passport funds, and the process for removing notified foreign passport funds (denotification) are summarised in Table 1 and explained in Sections B, C and D of this guide. Our role RG 138.17 ASIC is an independent agency of the Australian Government that regulates registered companies, financial markets and financial services providers by enforcing and administering relevant legislation, including the Corporations Act. Note: For more information on the laws we administer, see Laws we administer on the ASIC website. RG 138.18 Our vision is for a fair, strong and efficient financial system for all Australians. RG 138.19 Among other things, we license and monitor financial services businesses and markets to ensure that they operate efficiently, honestly and fairly. These businesses are typically involved in pension funds, managed funds, shares and company securities, derivatives and insurance. RG 138.20 We are a passport regulator under the Asia Region Funds Passport with responsibilities to enforce and administer the Australian Passport Rules, including maintaining an Asia Region Funds Passport register. Note: For information on the main powers we have to administer the Asia Region Funds Passport, see Section E. How we will work with other passport regulators RG 138.21 The Memorandum of Cooperation (published on the Asia Region Funds Passport website) sets out the agreed rules and cooperation arrangements for passport regulators to consult, cooperate and exchange information, and to oversee passport funds, under the Asia Region Funds Passport. Page 8 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 8 Table 1: Overview of requirements Stage Requirement Guidance Entry requirements (before making an offer) For a foreign passport fund to become a notified foreign passport fund in Australia, the operator must:  be a registered foreign company (see s1213(1));  meet the ongoing offer of interests in the fund’s home economy requirement in one of the available ways (see section 17 of the Australian Passport Rules);  check if the name of the foreign passport fund is available to use;  complete and submit a notice of intention to offer interests in Australia (see s1213(2)); and  pay the relevant fee, which is set out in the notice of intention. Section B Ongoing requirements In addition to responsibilities under the Australian Passport Rules, notified foreign passport funds and their operators must comply with certain ongoing requirements under Australian law: see the Memorandum of Cooperation. These requirements include:  satisfying ongoing obligations of a registered foreign company;  observing AFS licence exemption requirements, or holding an AFS licence;  meeting Product Disclosure Statement (PDS) requirements, transaction confirmation requirements and cooling-off requirements;  complying with the prohibition on conflicted and other banned remuneration, and with advertising requirements;  maintaining a register of members;  providing ongoing disclosures, periodic statements, financial reports and auditors’ reports to members;  providing additional information about the interest on request, certain documents on request, or copies of books on court order;  making annual lodgements, providing change of event notifications and lodging registers of members;  reporting breaches to ASIC;  meeting internal and external requirements for handling Australian member complaints; and  paying an annual levy for ASIC supervisory costs. Section C Denotification requirements A notified foreign passport fund may be removed from the Asia Region Funds Passport Register either voluntarily or by ASIC. Section D RG 138.22 Regulatory cooperation is central to the continuing operation of the Asia Region Funds Passport because host regulators place considerable reliance on home regulators to regulate the operation of passport funds. This is to avoid unnecessary duplication of regulatory requirements. RG 138.23 These cooperation arrangements are intended to complement and not override existing cross-border regulatory cooperation arrangements. Page 9 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 9 B Entry requirements Key points Before offering interests in a foreign passport fund to persons in Australia under the Asia Region Funds Passport, a foreign passport fund operator must apply through the notification process: see RG 138.24–RG 138.27. To be eligible to apply, the foreign passport fund operator must: • be a registered foreign company (see RG 138.28–RG 138.33); and • have an ongoing offer of interests in the fund (or a sub-fund of the fund) in the home economy, or at least 30% of the value of interests for which the operator is responsible must be held by members whose address is in the home economy (see RG 138.34–RG 138.35). The foreign passport fund must have an acceptable name: see RG 138.36– RG 138.42. The foreign passport fund operator must submit a completed notice of intention to offer interests in Australia and attach a copy of the PDS, and pay the relevant fee: see RG 138.43–RG 138.49. We will assess the notice of intention against grounds for rejection during a 15-day ‘consideration period’ if the notice is not withdrawn (see RG 138.52– RG 138.74), and will confirm the foreign passport fund’s status after the consideration period has passed: see RG 138.75–RG 138.77. Certain information provided during the notification process will be published on the Asia Region Funds Passport Register: see RG 138.78–RG 138.79. Steps to take before submitting a notice of intention RG 138.24 A foreign passport fund operator may offer interests in a foreign passport fund to persons in Australia if it successfully completes the notification process. The foreign passport fund will become a notified foreign passport fund if, by the end of the consideration period: (a) we have not told the operator that required information has not been provided; (b) we have not rejected the notice of intention; and/or (c) the notice of intention has not been withdrawn (see s1213C). RG 138.25 If a foreign passport fund operator decides to offer interests directly to persons in Australia, the operator must hold an AFS licence. If the operator uses a distributor to offer interests, the operator does not need to hold a licence. This is so long as the offer is covered by the distributor’s licence: see s911A(2)(b). Page 10 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 10 RG 138.26 A foreign passport fund operator must not offer interests in the foreign passport fund unless it is a notified foreign passport fund: see s1213C. RG 138.27 A key policy objective of the entry requirements for foreign passport funds to offer interests in Australia is to maintain appropriate protection for Australian investors. Registered foreign company RG 138.28 Only a foreign passport fund operator that is a registered foreign company may submit a notice of intention: see s1213(1). A registered foreign company is a foreign company that is registered with ASIC to carry on business in Australia under Div 2 of Pt 5B.2: see s601CD(1). RG 138.29 By law, the information and documentation required by ASIC to register a foreign company is fulsome. In considering an application for registration in Australia, we must be satisfied that the foreign passport fund operator is registered in its home jurisdiction and meets all the requirements for registering a foreign company under Australian law. RG 138.30 Often, foreign company registration applications are delayed or refused due to failure to provide ASIC with the correct documentation. To ensure a timely process for registering a foreign company, foreign passport fund operators must ensure that the supporting documentation provided as part of the application meets the requirements for registration. RG 138.31 If a required document is in a language other than English, a foreign passport fund operator must ensure that it obtains and submits a reasonable translation of that document into English. Note: For more information on how to obtain a reasonable translation into English, see Translation of documents on the ASIC website. RG 138.32 To register a foreign company, the following steps are required: (a) ensure the proposed registered foreign company name is available; Note: For more information on company naming, see Rules for acceptable company names on the ASIC website. (b) complete and sign a Form 402 Application for registration as a foreign company; (c) include supporting documents, such as: (i) a current certificate of registration, or a document of similar effect, that confirms that the foreign passport fund operator is currently registered in the home economy; (ii) a copy of the foreign passport fund operator’s constitution certified as a true copy by the home regulator, a notary public or a duly Page 11 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 11 witnessed affidavit by a director or secretary of the foreign company; (iii) a memorandum of appointment of a local agent, or a power of attorney in favour of a local agent (a completed Form 418 Memorandum of appointment of local agent may be used); and (iv) a memorandum outlining the powers of Australian resident directors; and (d) submit to ASIC the completed Form 402 with the fee and supporting documents. Note: For more information on how to register a foreign company, see Register a foreign company in Australia on the ASIC website. Information Sheet 30 Fees for commonly lodged documents (INFO 30) has details of the fee to register as a foreign company. RG 138.33 After an application to become a registered foreign company has been processed and approved, we will send the applicant a registration certificate. We will also provide the newly registered foreign company with an Australian Registered Body Number (ARBN). Offer in home economy RG 138.34 A foreign passport fund operator must not offer interests in the fund in Australia unless it also maintains a connection with its home economy through an ‘ongoing offer in the home economy’: see section 17 of the Australian Passport Rules. RG 138.35 This requirement, which applies at the time an offer is made in Australia, can be met in one of the following ways: (a) at least 30% of the value of interests for which the foreign passport fund operator is responsible are held by members with a home economy address, and the operator has provided a disclosure document to the home regulator that meets home economy requirements for disclosure to the general public; or (b) there is an ongoing offer of interests (either in the passport fund or a sub-fund) in the home economy that is subject to the home economy requirements for an offer to the general public. This offer must not exclude retail investors resident in the home economy. Choosing a notified foreign passport fund name RG 138.36 A foreign passport fund operator must observe the same restrictions on naming the notified foreign passport fund as it followed when choosing its name as a registered foreign company. Page 12 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 12 RG 138.37 Before starting the notification process, a foreign passport fund operator should complete a check name availability search on the ASIC website. This will provide a guide on whether the proposed name for a notified foreign passport fund is used by another entity in Australia. However, it will not state if the proposed name is available under the Corporations Act. RG 138.38 A notified foreign passport fund must not have a name that is unavailable in Australia: see s1213B. A name will be unavailable if it is: (a) identical to the name that another entity has registered or reserved under the Corporations Act; (b) identical to the name of a new managed investment scheme that has lodged an application with ASIC for registration under s601EA; (c) identical to the name of another proposed notified foreign passport fund in relation to which a notice of intention under s1213 has already been lodged; (d) identical to the business name of another individual or body that is not the operator of the foreign passport fund; or (e) unacceptable in Australia under Sch 6 to the Corporations Regulations because it is offensive or suggests a misleading connection with the government (see s1213B of the Corporations Act and Sch 6 to the Corporations Regulations). Note: For information on rules applied to determine if a proposed name is identical to another name, see Sch 6 to the Corporations Regulations and Rules for acceptable company names on the ASIC website. RG 138.39 If a proposed notified foreign passport fund name is unavailable, the foreign passport fund operator should notify us of an alternative name to use in Australia in the notice of intention. RG 138.40 A foreign passport fund operator may rely on a different foreign passport fund name in Australia than in the home economy if it notifies us and the home regulator that the fund will be using a different name in Australia: see s1213B(5)(b). RG 138.41 We will not reject a notice of intention based on a proposed notified foreign passport fund name, which would otherwise be unavailable under s1213B(1)(d), if the operator or fund has obtained written consent for that name from the responsible Minister or their delegate. RG 138.42 This consent must be attached to the notice of intention submitted for the fund. The Minister or their delegate may make their consent subject to conditions: see s1213B(6)–(7). Note: For information on the fee that must be paid with an application to the Minister or their delegate for consent to a name, see INFO 30. Page 13 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 13 Completing and submitting a notice of intention RG 138.43 A foreign passport fund operator must use its ARBN to log into the ASIC Regulatory Portal to notify its intention to offer interests in a foreign passport fund in Australia. RG 138.44 The foreign passport fund operator must complete a notice of intention and attach a copy of the PDS: see s1213(2)(b). Note: If a foreign passport fund operator is unable to notify its intention to offer interests in a foreign passport fund in Australia using the portal, contact us online. RG 138.45 The foreign passport fund operator must also pay the applicable fee when submitting its notice of intention. Note: For more information on the fee that must be paid to submit a notice of intention, see INFO 30. RG 138.46 The notice of intention is made up of yes/no, multiple choice and open- ended questions. RG 138.47 When we ask for specific representations to be given about compliance with the Corporations Act and the ASIC Act, we will usually rely on the answer that is given to form an opinion about the likelihood of compliance. RG 138.48 Foreign passport fund operators must take care that their representations are correct. If a notified foreign passport fund operator does not take reasonable steps to ensure it avoids a false statement to ASIC, it may be guilty of an offence: see s1308. RG 138.49 When completing a notice of intention, a foreign passport fund operator will be asked about its processes and procedures that demonstrate capability to comply with applicable Australian law. This includes questions about: (a) receiving, considering and responding to complaints by Australian members and potential investors; (b) monitoring the compliance of distributors in Australia; (c) preparing and reviewing disclosure and reporting to Australian members; (d) preparing advertising and marketing in Australia; (e) if relevant, lodging communications with an Australian financial market; and (f) lodging ongoing notifications with ASIC. Note: For our approach to assessment of likely compliance, see RG 138.59–RG 138.64. Page 14 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 14 Withdrawing a notice of intention RG 138.50 A foreign passport fund operator may withdraw its notice of intention by sending ASIC a request at any time during the consideration period: see s1213(3). RG 138.51 If a foreign passport fund operator withdraws its notice of intention after it has been submitted, we will not refund the fee for lodging the notice of intention or hold it over for a new notice. Some information from the withdrawn notice of intention will be included on the Asia Region Funds Passport Register. Note: For a summary of the information that will be included on the register, see RG 138.78–RG 138.79. Our assessment of a notice of intention RG 138.52 We have 15 business days, or longer period as agreed with the foreign passport fund operator, to assess a notice of intention (e.g. the consideration period). The 15 business days begins on the day after the notice of intention is lodged with ASIC and can be extended if agreed in writing between ASIC and the relevant operator: see s1213D(1). Extensions must be for no more than five business days, but we may agree to more than one extension: see s1213D(2). Note: Examples of when an extension may be necessary include when the consideration period extends over a holiday period or the notice of intention raises issues that are complex. Completeness check RG 138.53 After we receive a notice of intention, we will consider whether the required information has been provided. If the information has not been provided, we will ask the foreign passport fund operator to give us more information. If we request more information, the operator must provide the information within the time in our request. We may refuse to accept the notice of intention for lodgement if we do not receive the information in the relevant timeframe. RG 138.54 If we notify the foreign passport fund operator that we are refusing to accept the notice of intention for lodgement, the operator must start the notification process again by lodging a new notice of intention. Grounds for rejection RG 138.55 If we consider the required information for a notice of intention is complete, we will then assess the notice against some or all of the grounds of rejection in the Corporations Act. Page 15 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 15 RG 138.56 The fact that we have not rejected a notice of intention does not mean that we have formed an opinion that the foreign passport fund operator is, or is likely to be, compliant with any laws in its home economy or in Australia. Notified foreign passport fund operators remain responsible for ensuring compliance. RG 138.57 We must reject a notice of intention if the responsible Minister has made a determination that a foreign passport fund operator or operators, or a class of foreign passport funds from a specified home economy, must not offer interests in Australia: see s1213B(8). RG 138.58 We may also reject a notice of intention if: (a) we consider that relevant laws in Australia or the home economy have not been, are not being, or are not likely to be, complied with in relation to the foreign passport fund; (b) we consider that it is not in Australia’s public interest for the foreign passport fund operator to offer interests in Australia; (c) we have not consented to an exemption or modification made to the home economy Passport Rules that affects the foreign passport fund or entities connected with the fund; or (d) the name of the proposed notified foreign passport fund is not available in Australia, and the foreign passport fund operator has not notified ASIC and the home regulator in writing that it will adopt an alternative available name (see s1213B(1)). We consider that compliance with the relevant laws is unlikely RG 138.59 This ground for rejection supports a key objective of the Asia Region Funds Passport. This is: … maintaining the legal and regulatory frameworks which promote investor protection, fair, efficient and transparent markets for financial services, supporting financial stability and providing high standards in the management and distribution of collective investment schemes (see the goals of the Memorandum of Cooperation, p. 1). RG 138.60 When completing a notice of intention, a foreign passport fund operator will be asked about its processes and procedures that demonstrate capability to comply with applicable Australian law. In assessing an operator’s processes and procedures for complying with Australian law, we do not take a ‘one- size-fits-all’ approach. We assess compliance processes collectively and in proportion to the nature, scale and complexity of the operator’s business activities. Page 16 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 16 RG 138.61 In assessing nature, scale and complexity, we will consider factors such as: (a) the number of collective investment schemes for which the foreign passport fund operator is responsible and the size of its funds under management; (b) the investment strategies and business activities of the foreign passport fund, including the extent to which it will employ leverage; (c) whether the foreign passport fund interests are, or are to be, quoted on a financial market; (d) the anticipated profile of Australian investors, including whether fund interests will be marketed to retail clients; (e) the activities, including investment approach, that the operator engages in; (f) the extent to which the operator delegates material operational activities, and the level of oversight over its delegates; (g) whether the operator’s main business is undertaking funds management; and (h) the number of staff that will be involved in the operation of the prospective notified foreign passport fund. RG 138.62 We may assess specific compliance processes and procedures. In conducting this assessment, we may consider factors such as: (a) whether the procedure or process is aligned with the foreign passport fund operator’s values, objectives and strategy; (b) whether the procedure or process, as written in manuals or guidelines, reflects the actual procedures, processes or practices that are followed by the operator and the fund, and its staff; (c) whether the procedure or process is set out with enough clarity and certainty to allow relevant staff to follow the requirement and assess whether it has been complied with; (d) whether compliance with the procedure or process is monitored and the mechanisms for monitoring compliance are sufficiently certain to ensure that they will or have been complied with, and any non- compliance is reported to relevant staff and the independent oversight entity as required; (e) whether the procedure or process provides for separate people to have responsibility for carrying out a control and for monitoring compliance with that control; (f) whether the frequency and quantity of compliance assessments, and their monitoring, are sufficient to effectively manage any related compliance risks; and (g) whether the procedure or process is maintained so that it is up to date. Page 17 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 17 RG 138.63 We may also review the PDS to check whether it has been prepared in accordance with the disclosure requirements in the Corporations Act and any relevant ASIC policy. If we consider a PDS omits information that might reasonably be expected to have a material influence on a retail client’s decision whether to invest, or contains a misleading or deceptive statement, we may request amendments be made to address our concerns. A supplementary or replacement PDS must be lodged with us. Note: For information on supplementary PDSs, see RG 138.133–RG 138.136. RG 138.64 We must request the home regulator’s opinion before rejecting a notice of intention on the basis that the foreign passport fund has not, or is not likely to have, complied with the law of the home economy (including the home economy Passport Rules). If the home regulator provides its opinion within the requested period, we must give effect to that opinion: see s1213B(2). If the home regulator does not provide an opinion within the requested period, we may reject the notice of intention. We consider that it is not in Australia’s public interest RG 138.65 The term ‘public interest’ is not defined in the Corporations Act. Under this ground of rejection, we must weigh the public interest in allowing the foreign passport fund to operate in Australia against any potential detriments or risks for Australian investors. RG 138.66 Benefits to the public interest of allowing a foreign passport fund to operate in Australia may include greater competition, increased investment opportunities for Australian investors, and the strengthening of Australia’s relationship with the home economy. RG 138.67 Harm to the public interest from allowing a foreign passport fund to operate in Australia may result from concerns that the fund will breach Australian laws or place Australian investors at risk. RG 138.68 When considering harm to the public interest, we must not consider any negative consequences of greater competition for Australia’s funds management industry: see s1213B(3). We are not required to assess the public interest in relation to every notice of intention we receive, but may do so if we consider it appropriate: see s1213B(4). We do not consent to an exemption or modification to the home economy Passport Rules RG 138.69 A passport regulator may exempt a foreign passport fund, foreign passport fund operator or other person responsible for compliance in relation to a foreign passport fund from the home economy Passport Rules. A passport regulator may also modify the application of the home economy Passport Rules to a fund, operator or person: see section 13(1) of Annex 2 to the Page 18 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 18 Memorandum of Cooperation (published on the Asia Region Funds Passport website). RG 138.70 Where we (as a host regulator) have not consented to an exemption or modification to home economy Passport Rules, we may consider it is appropriate not to permit interests in a foreign passport fund from that home economy to be offered in Australia. RG 138.71 If the exemption or modification relates to conduct that may not comply with the Australian Passport Rules, we recommend that a foreign passport fund operator apply to ASIC for relief from the obligation under the Australian Passport Rules before submitting a notice of intention. Note: For more information on ASIC’s powers and policy for granting exemptions and modifications in this context, see Section E. The name of the foreign passport fund is unavailable RG 138.72 We may reject a notice of intention if the name of the proposed notified foreign passport fund is unavailable: see RG 138.36–RG 138.42. The policy objective of this ground of rejection is to prevent any contravention of Australian legal requirements on the use of names in a commercial context. What we will do if a notice of intention could be rejected RG 138.73 Before we reject a notice of intention, we will normally write to the foreign passport fund operator explaining why we are proposing rejection. We will generally give the operator two options. These are to: (a) Make a written submission explaining why the notice of intention should not be rejected—If, after considering a submission, we decide to reject the notice of intention, we will write to the operator setting out the decision and reasons why. We will explain the operator’s review rights and notify the home regulator of our decision. Some information from the rejected notice of intention will be included on the Asia Region Funds Passport Register. (b) Withdraw the notice of intention—If an operator withdraws the notice of intention, we will not refund the fee for lodging the notice of intention or hold it over for a new notice of intention. We may notify the home regulator of the withdrawal. Some information from the withdrawn notice of intention will be included on the Asia Region Funds Passport Register. Note: For a summary of the information that will be included on the register, see RG 138.78–RG 138.79. RG 138.74 We must inform a foreign passport fund operator of our decision to reject a notice of intention in writing: see s1213B(9). Page 19 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 19 When can interests be offered in Australia? RG 138.75 A foreign passport fund operator may offer interests in a foreign passport fund to persons in Australia, and the fund will be a notified foreign passport fund, on the first day after the end of the consideration period if: (a) we have not told the operator that required information has not been provided; (b) we have not rejected the notice of intention; and/or (c) the notice of intention has not been withdrawn (see s1213C). RG 138.76 We will confirm in writing a foreign passport fund’s status as a notified foreign passport fund after the consideration period has passed. RG 138.77 Anyone may also check the status of a notified foreign passport fund by viewing the Asia Region Funds Passport Register and/or the equivalent register maintained by the home regulator. Information on the Asia Region Funds Passport Register RG 138.78 Some of the information sent to ASIC as part of the notification process must be included on the Asia Region Funds Passport Register. The register must also include details of funds that have been removed as notified foreign passport funds: see s1214. RG 138.79 The register contains information about Australian passport funds and notified foreign passport funds, including: (a) the fund’s Notified Foreign Passport Fund Registration Number (NFPFRN) and home economy; (b) the fund’s Australian Passport Fund Registration Number (APFRN); (c) the fund’s name, registration date and review date; (d) any alternative name used by the fund (in Australia or in another participating economy), where the name was used, and the date the fund started and ceased using that name; (e) a statement that the fund is a notified foreign passport fund; (f) the notified foreign passport fund operator’s name and ARBN; (g) any previous name and ARBN of an operator of the fund, including the date when that operator started and ceased to have that name and ARBN; (h) the name of the auditor of the fund’s financial reports for each financial year; (i) the name of the implementation reviewer for the fund for each review period (if any); and Page 20 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 20 (j) if applicable, the date on which the foreign passport fund was removed as a notified foreign passport fund and a statement of the reason for the removal (see s1214(3) and reg 8A.5.10(3)–(4)). Note: References to regulations (reg) are to the Corporations Regulations, unless otherwise specified. Page 21 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 21 C Ongoing requirements Key points A notified foreign passport fund operator must comply with ongoing requirements as a registered foreign company and on behalf of the notified foreign passport fund. The ongoing requirements are in addition to requirements under laws of the home economy and in the Passport Rules. They include: • satisfying obligations of a registered foreign company (see RG 138.80– RG 138.104); • observing AFS licence exemption requirements, or holding an AFS licence (see RG 138.105–RG 138.109); • meeting PDS requirements (see RG 138.110–RG 138.137), transaction confirmation requirements (see RG 138.138–RG 138.141) and cooling- off requirements (see RG 138.142–RG 138.143); • complying with the prohibition on conflicted and other banned remuneration (see RG 138.144–RG 138.149) and with advertising requirements (see RG 138.150–RG 138.156); • maintaining a register of members (see RG 138.157–RG 138.159); • providing ongoing disclosures (see RG 138.160–RG 138.169), periodic statements (see RG 138.170–RG 138.172), financial reports and auditors’ reports to members (see RG 138.173–RG 138.178); • providing additional information about the interest on request (see RG 138.179–RG 138.181), certain documents on request (see RG 138.182–RG 138.196), or copies of books on court order (see RG 138.197–RG 138.201); • making annual lodgements, providing change of event notifications and lodging registers of members (see RG 138.202–RG 138.228); • reporting breaches to ASIC (see RG 138.229–RG 138.239); • meeting internal and external requirements for handling Australian member complaints (see RG 138.240–RG 138.243); and • paying an annual levy for ASIC supervisory costs as a notified foreign passport fund operator (see RG 138.244–RG 138.253). Registered foreign company obligations RG 138.80 A notified foreign passport fund operator has ongoing obligations as a registered foreign company to: (a) maintain a registered office and adequate signage on locations in Australia; (b) include certain information with all first mentions of its name in public documents; Page 22 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 22 (c) have a local agent; and (d) lodge relevant documents with ASIC. Registered office RG 138.81 A notified foreign passport fund operator must have a registered office in Australia. This office must be open each business day from at least 10 am to 12 noon and from 2 pm to 4 pm. This is unless the operator notifies ASIC of alternative registered office hours. A representative of the operator must be present at the registered office whenever it is open: see s601CT(1). RG 138.82 The requirements for a registered office to be open and for a representative to be present ensure that notified foreign passport fund operators are contactable. They also facilitate receipt of communications and/or service of documents. Name at registered office and place(s) of business RG 138.83 A notified foreign passport fund operator must paint or affix on the outside of every office and place in Australia at which the operator’s business is carried on that is open and accessible to the public (including the registered office): (a) the operator’s name and place of origin; (b) notice of the fact that the liability of company members is limited (if applicable, and if the operator’s name does not end with ‘Limited’ or ‘Ltd’); and (c) at the registered office—the expression ‘Registered Office’ (see s601CW(9)). RG 138.84 This ensures that individuals dealing with the notified foreign passport fund operator understand where the operator is located and the site of its registered office. RG 138.85 A notified foreign passport fund operator’s name must be in a conspicuous position and in letters that are easily legible wherever placed at a business location. The name must be repainted, reaffixed or amended to ensure that it remains conspicuous and easily legible: see s601CW(9). RG 138.86 A notified foreign passport fund operator must not carry on business in Australia under a name that is not its registered foreign company name. An operator must also not carry on business in Australia under the name used in its place of origin if that is not the operator’s registered name in Australia: see s601DD(1). Page 23 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 23 Name on public documents RG 138.87 A notified foreign passport fund operator must include certain information with all first mentions of its name on public documents that the operator signs, issues or publishes. A public document includes any document signed by or on behalf of the operator (excluding machine-developed receipts): see s88A, 601DE and 601DF. RG 138.88 The information that must be set out with the first use of a notified foreign passport fund operator’s name is: (a) the operator’s name and place of origin; (b) if applicable, notice of members’ limited liability; and Note: This will not be applicable if this is apparent from the operator’s name (e.g. if it ends with ‘Limited’ or ‘Ltd’). (c) either: (i) the expression ‘Australian Registered Body Number’ followed by the operator’s ARBN; or (ii) if the last nine digits of the operator’s Australian Business Number (ABN) are the same, and in the same order, as the last nine digits of its ARBN—the words ‘Australian Business Number’ followed by the ABN (see s601DE(1)). RG 138.89 A notified foreign passport fund operator does not have to disclose its ABN or ARBN on a public document as set out in RG 138.88(c) if: (a) the operator is registered on the Australian Business Register; (b) the last nine digits of the operator’s ABN are the same, and in the same order, as the last nine digits of the operator’s ARBN; and (c) ‘Australian Business Number’ or ‘ABN’ is displayed with the operator’s name when that name is first mentioned on the public document (see s601DG, and reg 5B.3.03 and Sch 7 to the Corporations Regulations). Local agent RG 138.90 A notified foreign passport fund operator must maintain a local agent in Australia. An operator may have more than one local agent at the same time. RG 138.91 The local agent is responsible for doing all acts, matters or things that the notified foreign passport fund operator is required to do by or under the Corporations Act and may be personally liable for a penalty imposed on the operator for contravention of the Corporations Act: see s601CJ. RG 138.92 A person remains a local agent from the date of their appointment until that person dies or the person or the notified foreign passport fund operator Page 24 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 24 submits a completed Form 404 Notification of change to agent of a foreign company. If a local agent or operator notifies ASIC about termination of a local agent’s appointment, the termination will take effect on the later of: (a) the date specified in the termination; or (b) 21 days from the date of lodgement (see s601CH). RG 138.93 If a person ceases to be an agent, the notified foreign passport fund operator must appoint another agent by submitting Form 404 and a memorandum of appointment or power of attorney. This may be completed using Form 418. Lodgement must occur within 21 days from the date the agent ceases: see s601CF. RG 138.94 If Form 404 and Form 418 are executed on behalf of a notified foreign passport fund operator, a copy of the document authorising the execution and Form 403 Verification of copy of document authorising, on behalf of a foreign company, execution of a document appointing a local agent must also be submitted. Submitting documents with ASIC RG 138.95 A notified foreign passport fund operator must submit documents with ASIC as a registered foreign company. If an operator fails to lodge a document as required, or fails to lodge the document within the required time, it may be fined. RG 138.96 A notified foreign passport fund operator must also include the NFPFRN and APFRN for the fund on any documents submitted to us about the fund. If an operator is lodging a paper form, it must meet certain requirements regarding format, quality and text: see our ‘Document lodgement requirements’ publication from How to lodge forms: online, email, mail on the ASIC website. RG 138.97 In general, any person may inspect a document lodged with us: see s1274(2). Annual lodgements RG 138.98 A notified foreign passport fund operator must lodge the following documents with ASIC each financial year: (a) an annual return (Form 406 Annual return of a foreign company); (b) the balance sheet, cash flow statement and profit and loss statement for the operator for the last financial year; (c) any documents that the operator is required to prepare by law in its place of incorporation; and (d) a statement verifying the financial reports (Form 405 Statement to verify financial statements of a foreign company) (see s601CK(1)). Page 25 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 25 Note: For more information on the fees that must be paid with lodged information, see INFO 30. RG 138.99 However, a notified foreign passport fund operator with a place of incorporation in New Zealand is not required to lodge the documents listed in RG 138.98(a)–RG 138.98(d) if it has given the document, or a copy, to the New Zealand Companies Office: see s601CDA and reg 5B.2.05. Note: For more information on lodging documents as a New Zealand company, see Lodging documents as a New Zealand company and Regulatory Guide 190 Offering financial products in New Zealand and Australia under mutual recognition (RG 190). RG 138.100 If we consider that a notified foreign passport fund operator’s financial report does not sufficiently disclose its financial position, we may require the operator to provide an audited copy of its balance sheet, cash flow statement or profit and loss statement. We will set out the form of the substitute financial report and period for lodgement in a written notice. RG 138.101 We may also require the notified foreign passport fund operator to lodge additional particulars and documents: see s601CK(3). However, this power is limited to what would be required to be provided by a public company under the Corporations Act. RG 138.102 If a notified foreign passport fund operator is not required to prepare a balance sheet, cash flow statement or profit and loss statement in its place of incorporation, the operator must still lodge a version of those documents with ASIC each year. Change of event notifications RG 138.103 A notified foreign passport fund operator must inform ASIC in writing about the events described in Table 2. The notification must use the relevant form and be submitted within the applicable period set out in Table 2: see s601CG, 601CV(1), 601CT(3)–(4) and 601DH(1). Note: We may consider the information in a notification to decide whether it is necessary or appropriate to take any further action. We do not take action in response to all events notified to us. Table 2: Change of event notification requirements Event Time period(s) Form Change in registered office hours or address Seven days for change of office hours or change of registered office in Australia One month for change of address in the place of origin Form 489 Change in directors’ details, including appointment One month from the change Form 490 Page 26 REGULATORY GUIDE 138: Foreign passport funds © Australian Securities and Investments Commission November 2024 Page 26 Event Time period(s) Form Change in registered company name, constitution, or resident director powers 14 days for change of name One month for change of constitution or change to powers of directors resident in Australia Form 409 Change in local agent details, including appointment of a director One month from the change Form 404 Form 403 Form 418 Cessation of business in Australia Seven days from the cessation Form 407 Winding up or deregistration Note: Two Form 407s must be submitted if a foreign company commences winding up in its place of origin—one on commencement of the winding up and the other on dissolution of the company. One month from proceedings being commenced to wind up the foreign company in its place of origin, including the appointment of a liquidator One month from the foreign company being dissolved or deregistered in its place of origin Form 407 RG 138.104 We may extend the one-month period to notify ASIC of changes in a notified foreign passport fund operator’s constitution, directors, registered office address or local agent if we receive a request in writing based on special circumstances: see s601CV(2). Note: Special circumstances include if there is a delay in setting the location of a new registered office address or the replacement of a director for reasons that are beyond the notified foreign passport fund operator’s control. AFS licensing obligations RG 138.105 A person generally cannot carry on a financial services business in Australia without an AFS licence: see s911A(1). A financial services business is the business of providing financial services. Providing financial services is defined to include: (a) providing financial product advice; (b) dealing in a financial product; (c) making a market for a financial product; (d)