Third tranche of draft CCIV legislation released

By Marc Kemp
Private Capital

In brief

Draft legislation intended to address some of the continuing gaps in the proposed corporate collective investment vehicle framework has been released, with submissions on it closing soon. Partner Marc Kemp and Associate Mai Go report.


On 12 October 2018, Treasury released for consultation the third tranche of the Treasury Laws Amendment (Corporate Collective Investment Vehicle) Bill 2018, and accompanying explanatory memorandum, to address some of the remaining gaps in the proposed corporate collective investment vehicle (CCIV) framework. We are currently reviewing the draft Bill in detail, as we prepare our submissions to Treasury.

As most of you will know, the CCIV is one of two new forms of collective investment vehicle the Federal Government is proposing to introduce as investment vehicles that are designed to be more recognisable to offshore investors.

Following consultation on the exposure draft of the legislation introducing the CCIV in 2017, Treasury released, on 13 June 2018, the first tranche of the Treasury Laws Amendment (Corporate Collective Investment Vehicle) Bill 2018 (the CCIV Bill), which set out the core provisions, in the form of a new Chapter 8B in the Corporations Act 2001 (Cth). The second tranche quickly followed, on 19 July 2018, and it covered the outstanding substantive aspects of the CCIV regime. This included provisions on the external administration of a CCIV in a winding up situation, the application of the financial services regime to CCIVs, and the liability of the corporate director of a CCIV for its contraventions of the law. The proposed penalties framework was also set out in the accompanying explanatory materials. We have provided submissions on tranche 1 and 2, which are available on our CCIV Hub.

Summary of tranche 3

The third tranche of the CCIV Bill addresses some of the unresolved aspects of the CCIV framework, which we have set out below. We will address each of these items (where relevant) in our submissions to Treasury.

Corporations Act Section Subject matter Summary of provision in CCIV Bill


Depositary independence

A three-pronged test that must be satisfied for a depositary to meet the independence requirement in relation to the corporate director of a CCIV:

  • the structural independence test;
  • the voting/control test; and
  • the independent director test.

If any of the above tests are not satisfied by the depositary, any other entity performing depositary functions or any of their related body corporates, the depositary itself is taken to fail the independence requirement.

Happily, Treasury does not seem to have included a test requiring the depository to be independent of the corporate director's associates.

ss 12–000–12–290, 12-005–12–030, Division 3 of Part 8B.12, Division 4 of Part 8B.12, Divisions 5 to 7 of Part 8B.12

External administration

The general approach to external administration of a CCIV is for the external administration provisions in Chapter 5 to apply at the sub-fund level, rather than at the CCIV level. This has been addressed by applying translation rules to the existing external administration provisions in Chapter 5, such that the existing provisions are applicable to sub-funds, corporate directors and shares or debentures referable to a sub-fund.

The draft provisions also include:

  • arrangement and reconstructions of sub-funds – sub-funds can be rearranged within a CCIV or transferred within a CCIV;
  • receivership – receivers are taken to be appointed for each sub-fund separately where an asset has been allocated to multiple sub-funds;
  • winding up – a CCIV cannot be wound up but a sub-fund may, and a liquidator is appointed to that sub-fund; and
  • insolvent trading – natural person directors (rather than the corporate director) owe the duty to prevent insolvent trading.

ss 13–000–13–045

Deregistration of sub-funds and CCIVs

The framework for deregistering a sub-fund and CCIV is to be incorporated as Schedule 3 to Chapter 8B. The provisions include:

  • The CCIV, corporate director or a liquidator of a sub-fund may be voluntarily apply for a sub-fund to be deregistered where the sub-fund has no assets or liabilities, and the CCIV is not a party to any legal proceedings that relate to that sub-fund.
  • ASIC also has the power to deregister a sub-fund in certain circumstances.
  • If, as a result of ASIC deregistering a sub-fund, the CCIV has no registered sub-funds, ASIC must deregister the CCIV.
  • A sub-fund and a CCIV may be reinstated following deregistration in certain circumstances.

ss 14–005–14–010

Takeovers, compulsory acquisitions and buy-outs

The following will not apply to a CCIV:

  • the takeover, compulsory acquisitions and buy-outs rules set out in Chapter 6 of the Corporations Act;
  • for a target CCIV, the rules in Chapter 6A requiring the bidder to compulsorily acquire or buy out certain securities in the target CCIV;
  • any of the related rules in Chapter 6B; and
  • the rules in Chapter 6C, because a CCIV will be prohibited from being listed on a prescribed financial market.

However, the takeover, compulsory acquisitions and buy-outs rules will apply to CCIVs when the CCIV is proposing to acquire or hold an interest in any entity that is the subject of these rules (eg where the CCIV is a bidder in a takeover process).

The Takeovers Panel will not have jurisdiction to declare under s675A of the Corporations Act circumstances in relation to the affairs of a CCIV to be unacceptable circumstances.

ss 15–000–16005

Disclosure and fundraising
  • The continuous disclosure requirements in Chapter 6CA will apply to CCIVs that are disclosing entities.
  • However, because CCIVs are subject to the PDS regime in Chapter 7, the disclosure and fundraising rules in Chapter 6D will not apply.
  • A person is prohibited from offering securities in a CCIV that does not exist or a sub-fund that has not been established.

Other consequential amendments

Other amendments include those to the following, to accommodate the CCIV regime:

  • the Asia Region Funds Passport;
  • Chapter 9 of the Corporations Act;
  • Australian Securities and Investments Commission Act 2001 (Cth); and
  • Personal Property and Securities Act 2009 (Cth).

What next?

Submissions on tranche 3 of the CCIV Bill will close on 26 October 2018. As before, Allens will prepare submissions on the CCIV Bill, and will be happy to hear from any clients and key industry bodies that wish to share with us their views on the draft legislation and explanatory memorandum.

Our submissions will be made available, along with all of our other submissions on the earlier tranches of the CCIV Bill, and other publications, draft legal and tax legislation, on our CCIV Hub.