Corporate Collective Investment Vehicle (CCIV) – an alternative to managed investment schemes

Corporate Collective Investment Vehicles

• The Australian managed fund industry has an exciting new alternative to the managed investment trust structure with the introduction of Chapter 8B of the Corporations Act 2001 (Cth) [1]. Chapter 8B introduces an alternative company structure known as a ‘Corporate Collective Investment Vehicle’ (CCIV).
• A CCIV is a new type of company that can be registered with the Australian Securities and Investment Commission (‘ASIC’) from 1 July 2022.
• The aim of the CCIV is to attract further funds from foreign investors by providing a structure which is recognised globally versus the current Australian trust structure (referred to as ‘managed investment schemes’).

Requirements of a CCIV

• A CCIV is a company limited by shares which is a separate legal entity and must have at least one sub-fund. The sub-fund is all or part of the business of a CCIV and is not a separate legal entity. If the CCIV has more than one sub fund, then the assets and liabilities must be assigned to each of the sub‑funds. The Act sets out the rules on how the assets and liabilities of the fund must be assigned.
• The CCIV Framework [2] sets out the requirements for registration of a CCIV which includes:
• the CCIV must be a company limited by shares;
  • the CCIV must have a constitution (a copy of which must be lodged with the CCIV’s registration application);
  • the CCIV must have a sole corporate director, being a public company that holds an Australian Financial Services Licence authorising it to operate the affairs of the CCIV;
  • upon registration, the CCIV must have at least one sub-fund (the name of each sub‑fund must be specified in the CCIV’s registration application);
  • upon registration, each sub-fund of the CCIV must have at least one member;
  • notice must be given to ASIC in the CCIV’s registration application form confirming whether the CCIV is intended to be a wholesale CCIV or retail CCIV; and
  • if the CCIV is intended to be a retail CCIV, the CCIV must have a compliance plan and compliance plan auditor. A copy of the compliance plan, signed by all the directors of the corporate director, must be lodged with the CCIV’s registration application.

Governance and Corporate Director

• A CCIV must have a constitution. If a wholesale CCIV, the constitution must specify the requirements that must be complied with for the CCIV’s constitution to be modified or repealed and replaced with a new one. If a retail CCIV, the constitution must include certain specific matters, including provisions establishing a complaint handling process. ASIC may direct a retail CCIV to modify its constitution to ensure that it complies with the relevant content requirements.
• A CCIV must have a corporate director. It must not appoint a secretary and must not have any employees. A retail CCIV must also ensure at least half of the individual directors of the corporate director are external. External directors are directors that have not, in the previous two years, been an employee or manager of, or dealt in a substantial way or in a professional capacity, with the corporate director, and have no material interest or a relative of the corporate director.[3]
• If the corporate director of a retail CCIV is to have any rights to be paid fees out of a sub-fund or to be indemnified out of the assets of the sub-fund, the rights must be specified in the CCIV’s constitution and must be available only in relation to the proper performance of those duties. Any other agreement or arrangement has no effect to the extent it purports to confer such a right.
• A CCIV’s corporate director is responsible for the conduct of the CCIV.
• The corporate director owes various duties under the CCIV Framework, including a duty to act honestly and in the best interests of each members of the CCIV. If there is a conflict between the interests of the members and the corporate director’s own interests, the director must give priority to the members’ interests. Additional duties apply to directors of a retail CCIV, including a duty to comply with its compliance plan. Additional duties apply to both retail CCIVs and wholesale CCIVs with respect to treating members of the CCIV who hold shares of the same class equally, and who hold shares of different classes fairly, and members of different sub-funds fairly.

Taxation

• The taxation treatment of CCIVs and their members is designed to align with the existing tax treatment of attribution managed investment trusts (‘AMITs’) and their members.
• CCIVs are generally taxed on a flow-through basis if the CCIV meets the eligibility criteria, with the effect being that income will generally be taxed at the member’s individual rate and the CCIV generally pays no corporate tax. However, a CCIV sub-fund must meet the AMIT eligibility criteria to receive the flow-through tax regime. If it fails to meet the AMIT eligibility criteria the CCIV sub-fund will be taxed in accordance with general trust provisions (which is consistent with the current outcomes for AMITs). Investors in CCIVs will generally be taxed as if they had invested directly in the underlying assets. Members should seek taxation advice to confirm the taxation treatment of the CCIV structure.

Next Steps

• If considering a CCIV structure DMAW Lawyers would be pleased to assist. Please contact Peter Kupniewski, Tasha Naige or Mario Pegoli on (08) 8210 2222.

[1] See Corporate Collective Investment Vehicle Framework and Other Measures Act 2022 (Cth) (CCIV Framework) and Chapter 8B of the Corporations Act 2001 (Cth) (Act).

[2] Part 8B.2

[3] Corporate Collective Investment Vehicle Framework and Other Measures Act 2022 (Cth) section 1224G(2)(a)-(f).

The authors would like to thank corporate adviser and lawyer Mario Pegoli for his assistance with this article.

This article provides general commentary only. It is not legal advice. Before acting on the basis of any material contained in this article, seek professional advice.