The new relief is called ASIC Corporations (Serviced Apartment and Like Schemes) Instrument 2016/869, or Instrument 16/869 for short. Apartment Management Rights Operators need to understand and comply with Instrument 16/869 which commenced on 19 September 2016.
The new instrument of relief is very similar to the previous Class Orders it replaces, however, there are some amendments. They are:-
1. The maximum amount that can be held in a Furniture Fittings & Equipment (FF&E) Fund is now $10,000.00 per strata unit (up from $5,000.00);
2. The management rights operator is now required to report any failure to comply in a material respect with the instrument of relief to ASIC in writing, within 15 business days.
3. The old pro forma 186 exemption which required a separate application to the ASIC if the scheme involved apartments that could not be used for residential purposes, has been superseded. A new mechanism replaces the previous application process.
ASIC has also restated class order exemptions including:-
1. CO 02/185 for the sale of strata units for $500,000.00 or more;
2. CO 02/245 for closed schemes;
3. CO 02/304 for management rights schemes; and
4. ASIC pro forma 187.
In addition, ASIC has indicated it will revise its Regulatory Guide 140, which provides guidance in relation to the way in which ASIC interprets the managed investments provisions of the Corporations Act 2001 (Cth) with respect to Management Rights Schemes. No official timing has been given by the ASIC so please check with us to be kept up to date.
If you are about to purchase a Management Rights business, set up a Management Rights Business or sell apartments that will be in a Serviced Apartment Management Rights Scheme, you will need to comply. If you do not comply, then you do not have a valid exemption and you risk the buyers, owners in the letting pool or ASIC taking steps to stop you from operating a non-compliant scheme.
Led by partner Joe Welch, Hickey Lawyers has an experienced team who can advise on all aspects of Resort Development, including how to comply with the relevant relief. Contact Joe Welch at Hickey Lawyers.