The Benefits of CCIVs
- June 26, 2022
- Posted by: Paul Niederer
- Category: CCIV
Lets take a look at the Benefits of CCIVs, the new entity released recently in Australia.
This new framework for the regulation of financial services provided by the CCIV and its corporate director, encompasses many licensing and disclosure requirements.
Looking at the following benefits you can gain a good picture as to why it came into existence.
- Global familiarity. At present, Australia’s funds management sector is one of the largest and most sophisticated globally, but it is largely domestically focused.
- The key driver behind introducing the CCIV is to stimulate foreign investment in the Australian funds management industry.
- The trust fund structure has been unpopular and unfamiliar to overseas investment resulting in minimal overseas investment in Australian opportunities.
- CCIVs will have the legal form of a company limited by shares with most of the powers, rights, duties and characteristics. As a type of company, a CCIV has the legal capacity and powers of an individual and a body corporate.
- A CCIV’s investors own shares in the company rather than units as in a unit trust. The shareholders have the right to sell their shares in the manner that the CCIV provides.
- CCIVs allow appointed investment managers to build bespoke global portfolios. These fund structures will enable a legacy to be created that can be passed down through generations.
- Unlike an ordinary company, the CCIV is eligible for flow-through tax treatment.
- A security in a CCIV can be quoted on a financial market or settled using a financial market infrastructure (subject to that market’s rules).
- AFSL license is not required for your existing company, but regulatory coverage is achieved by having a Corporate Director as the sole director on the CCIV. The corporate director’s AFSL covers financial services provided by the CCIV, and accordingly, the CCIV is exempt from the requirement to hold an AFSL itself.
- Fractionalisation of land and buildings is much easier under this structure, including the issue of Tokens and NFTs is it is very future paced.
- Each sub-fund is segregated. Each sub-fund is not a separate legal entity, but the assets of each sub-fund are strictly segregated from all other parts of the CCIV’s business and can only be applied for specific purposes (e.g., meeting liabilities of that particular sub-fund). This protects investors in a specific sub-fund of a CCIV by quarantining the business of that sub-fund from the business of all the other sub-funds of the CCIV.
- This is achieved by the assets and liabilities of each sub-fund which are strictly segregated from the assets and liabilities of the other sub-funds of the CCIV, including in an external administration context.
- The sub-fund structure enables a single CCIV to offer multiple products and investment strategies, including facilitating appropriate cross-investments between sub-funds within a CCIV, enabling a CCIV to utilise funds management strategies such as hedge or master-feeder structures.
[…] Corporate Director of a CCIV is a new role. The Corporate Director is a public company with an AFSL, authorised to operate a CCIV, while primarily responsible for the CCIV obligations, it can appoint […]
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