ASIC has outlined its approach to increasing the net tangible assets (NTA) requirement for responsible entities of registered managed investment schemes.
What is changing:
- minimum financial thresholds in the NTA requirement will be increased to reflect inflation between June 2013 (when they were last updated) and March 2026
- annual indexation will be introduced to ensure the thresholds remain current, and
- the increases will apply to responsible entities, operators of investor directed portfolio services (IDPS) and corporate directors of retail corporate collective investment vehicles (CCIVs).
The changes will commence on 1 July 2027. The thresholds applying from this date will include the first annual indexation adjustment.
ASIC considers that increasing the financial thresholds in the NTA requirement in line with inflation is appropriate to restore their financial value and ensure the objectives of the requirement are met.
We will amend ASIC Corporations (Financial Requirements for Responsible Entities, IDPS Operators and Corporate Directors of Retail CCIVs) Instrument 2023/647 (ASIC Instrument 2023/647) and update Regulatory Guide 166 AFS Licensing: Financial requirements (RG 166) to reflect the changes in the coming months.
Consultation
ASIC’s decision follows consideration of 18 submissions received in response to Consultation Paper 388 Net tangible assets requirement for responsible entities (CP 388). We had a range of feedback from respondents on which option for increasing the NTA requirement was preferred.
The option we adopted (Option 1 - Increase financial thresholds in line with inflation) received the most support. Some respondents said major changes to the requirement would negatively impact competition and innovation.
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Background
Responsible entities of registered managed investment schemes must meet the financial requirements (including the NTA requirement) in ASIC Instrument 2023/647. IDPS operators and corporate directors of retail CCIVs are subject to similar requirements. See RG 166.
The NTA requirement aims to align the fund operator’s interests with members and ensure it can meet its operating costs and that money is available to transition the scheme if it fails. The requirement is not designed to prevent business failure or fully compensate investors who suffer loss from significant events.
ASIC is Australia’s corporate, markets and financial services regulator.
