Commonwealth Consolidated Regulations

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CORPORATIONS REGULATIONS 2001 - REG 5D.2.06

Operation of common funds

Compliance with the Act and regulations

             (1)  A licensed trustee company may, from time to time and without liability for breach of trust, pay into or withdraw an amount from a common fund in accordance with the Act and these Regulations.

Note:          Payments into a common fund may be prohibited where this is contrary to the conditions on which the company holds the money: see subsection 601SCB(3) of the Act.

Withdrawals

             (2)  A licensed trustee company may do the following:

                     (a)  withdraw an amount from a common fund for a purpose relating to a trust or estate that is part of the fund and is managed or administered by the company;

                     (b)  withdraw from a common fund an amount at credit in the fund on account of a trust matter or a managed estate and invest the amount on the separate account of the matter or estate.

             (3)  A licensed trustee company commits an offence if it pays interest from the common fund on withdrawn amounts on or after the day of the withdrawal.

Penalty:  50 penalty units.

Derivatives

             (4)  A licensed trustee company commits an offence if:

                     (a)  when managing and administering a common fund, the trustee company enters into a derivative; and

                     (b)  at the time of entering into the derivative:

                              (i)  the trustee company did not do so for the purpose of managing a financial risk arising from:

                                        (A)  variations in the expenses of the common fund; or

                                        (B)  variations in the revenue obtainable from investments made by the common fund; and

                             (ii)  the arrangement was not in accordance with the trustee company's equitable and other duties as a trustee under the relevant State or Territory provisions set out in Schedule 8AE.

Penalty:  50 penalty units.

Applying income from investment

             (5)  A licensed trustee company commits an offence if it applies income from investment of a common fund other than for:

                     (a)  payment of the company's fee for the proper administration and management of the fund under the Act, regulations and terms of the common fund, proportionate to the value of the work done or the services rendered; and

                     (b)  allocation in accordance with subregulation (6) in relation to the accounts from which the fund is derived.

Penalty:  50 penalty units.

             (6)  For paragraph (5)(b), the allocation must be made at intervals not exceeding 6 months.

Investments

             (7)  A licensed trustee company commits an offence if:

                     (a)  the trustee company invests money committed to its administration or management; and

                     (b)  the investment is:

                              (i)  not in accordance with a decision of the Board made for the purpose of regulation 5D.2.05; and

                             (ii)  not made in a manner in which trust funds may be invested by a trustee under the relevant State or Territory provisions set out in Schedule 8AE.

Penalty:  50 penalty units.

Valuation of investments

             (8)  A licensed trustee company commits an offence if it does not comply with the following requirements about the valuation of investments of common funds:

                     (a)  by the third business day of each month, the trustee company must decide the value of the investments in each common fund as at the first business day of the month;

                     (b)  subject to subregulation (9), in deciding the value of securities listed on a financial market for a month, the trustee company must take the last sale price of the first business day of the month published by the market operator as the value of the listed securities;

                     (c)  the trustee company must make withdrawals from the common fund and further investments on the basis of the last valuation of investments made by the company.

Penalty:  50 penalty units.

             (9)  The requirement in paragraph 8(b) does not apply if, in a particular month, the licensed trustee company decides it is in the best interests of each account in the common fund that a sale price used for the valuation be one taken later in that month.

Realising investments

           (10)  A licensed trustee company may sell investments belonging to a common fund.

           (11)  A licensed trustee company that has realised an investment in a common fund commits an offence if it does not credit or debit a profit or loss from the investment to the unit holders of the common fund:

                     (a)  in proportion to the amount invested in the common fund by the unit holders at the time of the realisation; and

                     (b)  within 14 days of the realisation.

Penalty:  50 penalty units.



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