Ai Group welcomed the opportunity to make a submission on the proposal by the Australian Securities & Investments Commission (ASIC) to extend the relief currently provided to employee redundancy funds from the Australian Financial Services (AFS) licensing and managed investment provisions of the Corporations Act 2001 (Cth) (Corporations Act). The relief is due to expire on 1 October 2024.

ASIC proposes remaking ASIC Corporations (Employee redundancy funds relief) Instrument 2015/1150 and extending the relief for a period of five years.

As stated in the background information for the consultations on ASIC’s website:
ASIC considers that employee redundancy funds are likely to meet the definition of a managed investment scheme and a financial product, and that the operator of an employee redundancy fund would likely be subject to the requirements to hold an AFS licence, register the employee redundancy fund as a managed investment scheme, and comply with the managed investment provisions of the Corporations Act 2001.

Ai Group agrees that employee redundancy funds would meet the definition of a managed investment scheme and a financial product.

However, Ai Group strongly opposes ASIC’s proposed five year extension of the relief from the AFS licensing and managed investment provisions of the Corporations Act, for the reasons set out in this submission.

Any extended relief should be for a period of no more than six months to give employee redundancy funds time to obtain an AFS Licence and meet the other relevant requirements of the Corporations Act.