Last week McMahon Clarke held a well-attended function with over 100 attendees. One of the main subjects of the event was the new CCIV framework recently introduced in Australia. I believe this was the first event of its kind in Australia.
McMahon Clarke and, in particular, Elliott Stumm are very passionate about the CCIV and anticipate that CCIVs will become the de facto Australian funds management vehicle in time, and they have been tracking the development of the CCIV for some years.
Elliott’s presentation started by contrasting CCIVs with the existing trust structure that has been around for decades.
Some of the bullet points from Elliott’s presentation were:
(Please note these are my own notes from Elliott’s excellent presentation, but they are not Elliott’s words verbatim. Any misinterpretations are not intended, and corrections are welcomed. Please also refer to this website’s content disclaimers)
- CCIVs are company vehicles as opposed to a trust
- They are limited by shares
- The process of introducing a vehicle like the CCIV started in 2009
- Elliot announced that McMahon Clarke secured the first CCIV licence in Australia just before the event.
- The trust structure has:
- served us well
- but a trust is not a separate legal entity
- it is largely unfamiliar to overseas investors
- a set of obligations
- funds are held on behalf of others
- is relatively easy to get money out of
- A Public Company
- Is a separate legal entity
- Ownership and management are separated
- Difficult to get money out
- CCIV
- Takes the Pros of the two vehicles
- Easier to get money in and out
- Transactions are done in the company’s name
- It is a globally recognised structure
- The CCIV has a Corporate Director that holds the AFSL to operate
- Each CCIV must have at least one sub-fund
- For sub-fund, don’t think sub-trusts think a smaller part of a whole
- Investors invest directly in the sub-fund
- The same license enables the set-up of multiple sub-funds
- Sub-fund cross investment is possible
- Each sub-fund is separate and quarantined in the event of an administrator etc.
- A sub-fund has a separate legal personality from other sub-funds
- A PDS is required for Retail
- A Compliance Plan is not needed for Wholesale schemes
- Speed of adoption will depend on how quickly Financial Advisors understand CCIVs
- Capital raising platforms will also need to be comfortable with this new corporate form
- Some of the first adopters will be Investment managers with a global investor base
Thanks to McMahon Clarke for supporting this new Australian initiative.