David Garry and Associates is an independent consultancy specialising in providing structure advice and compliance documentation and systems advice to Fund Managers, Trustees and Custodians involved in the fund management sector.

We are not a Holder of an Australian Financial Services Licence, merely a corporate advisory firm that provides assistance in the legal frame work required to manage the Responsible Entity, Trustee, Custodian and Administration Services regime required by the licence holder under the Corporations Act.

Custodian

A custodian holds a scheme’s assets as agent for the RE keeping them separate from its own assets and the assets of other trusts.

The custodian’s role is to holds title to the scheme’s assets and its activities may include:

  • maintaining bank accounts
  • making payments as required by the client
  • issuing cash movement, compliance and audit reports
  • executing contracts for the sale and purchase of assets

A custodian would typically be sought by:

  • Promoters or investment managers wishing to establish a managed investment scheme in Australia.
  • An RE wanting to appoint or replace their existing custodian.

Engaging a custodian provides the following benefits:

  • A custodian holding the assets allows the RE and/or trust manager to focus on managing the fund.
  • Appointing a custodian can promote investor confidence.

Responsible entity

A RE is a public company holding an Australian Financial Services Licence which authorises it to operate a managed investment scheme. The RE has various statutory duties directed to protecting investors. An RE is required for all registered managed investment schemes in Australia.

The RE operates both as a trustee and manager. It holds scheme property on trust for investors, and has the power to appoint agents for authorised tasks relevant to the scheme. This may include appointing a custodian to hold scheme property on behalf of the RE.

The RE’s duties are set out in the Corporations Act 2001 and the managed investment scheme’s constitution. In particular, an RE must:

  • Act honestly;
  • Exercise the degree of care and diligence that a reasonable person would exercise if they were in the RE's position;
  • Act in the best interests of members of the scheme and, if there is a conflict between the members' interests and its own interests, give priority to the members' interests;
  • Treat all members with interests in the same class equally and members in different classes fairly;
  • Ensure the scheme has a constitution and compliance plan which meet regulatory and legal requirements;
  • Ensure that all scheme property is held separately from RE Property and property of any other scheme; and
  • Report any breach of the Corporations Act, relating to their scheme, to ASIC.

An RE’s services and responsibilities can include:

  • Issuing the project product disclosure statement.
  • Complying with annual financial reporting and auditing obligations.
  • Reporting obligations to investors.
  • Dealing with investor’s enquiries.
  • Managing the investment project or appointing the scheme operational manager.
  • Entering into an agreement to cover the relationship between the RE and operational manager including reporting, funding and budgetary arrangements, insurance, audits, additional funding, and other relevant matters.

RE services would typically be sought by:

  • Promoters or investment managers wishing to establish a managed investment scheme in Australia
  • Investors wanting to replace their existing RE
  • Existing RE’s who would like to be replaced for a particular business reason

If you have any questions or would like to know more about our services, please contact us.

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