This Gateway provides an overview of how financial services businesses are regulated in Australia. It outlines the registration and licensing requirements you may need to complete before operating a financial business in Australia.
Australian licences and registration differ depending on the business entity. One of the key decisions you will make before applying is your business structure.
Licences and registrations are not transferrable between legal entities, so you will need to make this decision before applying for licences and registrations.
In providing financial services in Australia, you may require more than one type of licence from more than one regulator depending on the nature of your business. This guide provides five major Gateways to demonstrate common categories of financial services:
It is not intended to cover all possibilities. More than one of these Gateways may apply to your intended business.
Financial services regulation is technical and complex. This Gateway is intended to assist you in finding the relevant information and to give you a starting point for discussion with advisors. This Gateway does not eliminate the need for professional advice and it is strongly recommended that you engage service providers to advise you on legal, compliance and tax matters.
This Gateway will guide you to the websites of the major regulators. Take the time to explore those sites thoroughly for more detailed information on requirements and regulation.
You may operate a financial service business under a number of different business structures. Business structures available in Australia include companies (the most common type), trusts, joint ventures, partnerships and sole traders. There are different legal and taxation requirements for different business structures. The regulations for particular financial services may require you to use a certain structure. Your legal adviser will assist you to determine the most appropriate structure for your situation.
Whether a business is 'carrying on business' in Australia will depend on certain legal principles and on the specific circumstances of the business. Where a business is in any doubt as to whether it may be ‘carrying on business’ in Australia it should seek legal advice.
ASIC has prepared "Regulatory Guides 121 Doing financial services business in Australia" to assist people or companies from overseas who propose to conduct a financial services business in Australia.
Read ASIC RG121 Doing financial services business in Australia
Applications to register an Australian company can be made through a number of service providers including accountants, lawyers and other advisers.
Read more about registering an Australian company on ASIC's website Read more about company names and use of company numbers in ASIC Regulatory Guide 13 ACN, ARBN and company namesA foreign company wishing to carry on business in Australia must be registered under Part 5B.2 of the Corporations Act 2001.
A foreign company is an incorporated body that is formed in an external territory of Australia or outside Australia. Some unincorporated bodies are also treated as a foreign company.
Once registered in Australia, foreign companies are required to lodge copies of financial statements with ASIC and notify ASIC when particular company details change.
Read about registering a foreign company on ASIC’s website
About funds management
Managed investment schemes are also known as managed funds, pooled investments or collective investments.
Common types of managed investment schemes include:
Note: Superannuation funds are regulated differently from managed investment schemes (see Gateway to Superannuation).
The Australian Securities and Investments Commission (ASIC) is the regulator of managed investment schemes. Operators of managed investment schemes are required to hold an Australian financial services licence (AFS licence). Investment managers providing advice, execution and portfolio allocation services to managed investment schemes and custodians of managed investment scheme assets also need to hold an AFS licence.
Most managed investment schemes in Australia are provided through a trust structure where trustees hold the managed investment scheme assets in trust on behalf of members of the managed investment scheme.
Managed investment schemes may be registered or unregistered schemes. Additional regulatory requirements apply to registered managed investment schemes (see below).
Funds may also be structured as a listed investment company (LIC) or a listed investment trust (LIT) listed on the Australian Securities Exchange (ASX). LICs do not regularly issue new shares or cancel shares as investors join and leave the fund. LITs can have an open-ended structure so that the number of units on issue can vary.
Read more about LICs and LITSManaged investment schemes offered to retail clients must be registered. A registered managed investment scheme must have a responsible entity that operates the scheme. Registered schemes are regulated under Chapter 5C of the Corporations Act 2001.
Responsible entities must be a registered Australian public company and hold an Australian financial services licence (AFS licence) that authorises the operation of the scheme. Once you have obtained your AFS licence, each registered managed investment scheme must then be registered with ASIC (see Step 3).
Each scheme must have a constitution, a compliance plan and a compliance plan auditor. In some instances, the operator of the registered managed investment scheme may need an external compliance committee.
ASIC produces regulatory guides to assist financial services providers understand how ASIC intends to regulate and interprets the obligations imposed by the Corporations Act 2001. The ASIC website provides regulatory guidance on registered managed investment schemes.
Unregistered managed investment schemes include those offered only to wholesale clients. As the name suggests, these schemes do not require a separate registration process. If you intend to operate an unregistered managed investment scheme, you must hold an AFS licence (see Step 2). Unregistered managed investment schemes are regulated under Chapter 7 of the Corporations Act 2001 only. Chapter 5C provisions do not apply to unregistered managed investment schemes.
