The Government proposes to amend the Corporations Regulations 2001 to provide that certain borrowing arrangements by superannuation fund trustees permitted by the Superannuation Industry (Supervision) Act 1993 (the SIS Act) are financial products under the Corporations Act 2001 (Corporations Act).
Generally, superannuation funds are not permitted to borrow funds except in limited circumstances. Superannuation funds are regulated under the SIS Act. Limited recourse borrowing arrangements, such as instalment warrants, are one of the exceptions permitted under the SIS Act, under subsections 67A and 67B.
A previous draft of these Regulations was released for public consultation in June 2010. They have been substantially revised in the light of submissions and other developments. The revised draft regulations are available for public comment for a four week period.
The proposed Corporations Amendment Regulations 2012 (No.)(proposed Regulations) would make limited recourse borrowing arrangements financial products under the Corporations Act when entered into by regulated superannuation funds.
The proposed Regulations amend the Corporations Regulations 2001 to provide that:
- limited recourse borrowing arrangements are financial products under the Corporations Act when acquired by superannuation funds;
- limited recourse borrowing arrangements are not a credit facility under the Corporations Act when acquired by superannuation funds; and
- an Australian Financial Services Licence covering securities or derivatives is taken to also cover limited recourse borrowing arrangements.