Corporate authorised representative or your own AFSL, and what a CAR cannot cover.

A licensee gives written notice under section 916A. Where the person authorised is a body corporate the market calls it a corporate authorised representative, and the individuals who do the work inside it are brought in by sub-authorisation under section 916B, which the licensee has to consent to in writing. The licensee, not you, lodges notice with ASIC in the prescribed form, both when the authorisation is given and when the recorded details change or the appointment ends. Confirm that lodgement has been made, because the register entry, and the authorised representative number it generates for your offer documents, is what an investor or auditor checks.

Part 7.6 of the Act allocates responsibility for a representative's conduct as between the licensee and the client, and its scope is narrower than the shorthand suggests. It reaches conduct relating to the provision of a financial service, on which a client could reasonably be expected to rely and on which the client in fact relied in good faith. Inside that scope, where the representative acts for one licensee only, the licensee is responsible whether or not the conduct was within the authority actually given, the responsibility extends to loss or damage the client suffers, and both are jointly and severally liable for the same remedies. Conduct with no connection to a financial service falls outside that scope, and the client is left with the representative alone.

Two further features decide how the agreement reads. An agreement is void so far as it purports to alter or restrict the operation of those responsibility provisions, so a host cannot contract its exposure to your investor back onto you. The Act separately preserves agreements under which the representative indemnifies the licensee for that liability, which is the clause every host agreement contains and the one your own insurer needs to see. Your own liability to the client is untouched throughout. The appointment gives an investor a second defendant with capital and an insurer, and gives the host, funded by your indemnity, a commercial reason to supervise you closely.

A sponsor can sign a well drafted appointment and still be unlicensed for the conduct that mattered. ASIC's published guidance on AFS licensing for trustees of unregistered managed investment schemes addresses trustees that issue interests in their own schemes. ASIC's position is that a trustee cannot rely on the authorised representative exemption in section 911A(2)(a) for issuing an interest in a scheme of which it is the trustee, because issuing as trustee is the act of a principal rather than a service provided on behalf of the licensee. If your trustee company signs the unit register, the appointment does not reach the conduct it was bought for.

The intermediary authorisation in section 911A(2)(b) is the structure ASIC points to for an unlicensed issuer, and it works only where two separate persons do two separate things. The product provider issues under an arrangement with a licensee, the licensee or an authorised representative of the licensee makes the offers to arrange the issue, the provider issues in accordance with offers that are accepted, and the offers have to be covered by the licensee's own licence. That is satisfied where the licensee itself makes the offers, or where they are made by an authorised representative that is not the trustee. It fails where the trustee tries to be both the product provider relying on the exemption and the representative making the offers.

The practical answers are to separate the offering entity from the trustee, to let the host run the investor-facing offer process end to end, or to appoint an independently licensed trustee as issuer. Whichever you take, the process has to match the structure on paper, because the exemption is tested on what the parties did rather than on how the arrangement was labelled: who the application form is addressed to, who signs the acceptance, who sends the confirmation, and who the investor believes they dealt with. A host's compliance team has a commercial interest in the answer, so put this one to your own adviser.

ASIC's financial requirements guidance carries a note that catches wholesale sponsors late. A trustee or operator of an unregistered scheme will generally need an authorisation to provide custodial or depository services on top of the authorisation to deal in interests in the scheme, because holding scheme assets on trust for members falls inside the Act's definition of a custodial or depository service. If that describes your structure, the host's licence has to carry the custodial authorisation as well.

The capital depends on how the assets are actually held. A licensee whose business is providing custodial or depository services must hold net tangible assets of the greater of $10 million or 10% of average revenue. A licensee that provides custody only as an incident of its other financial services sits at the greater of $150,000 or 10% of average revenue where it holds the assets itself. Where it places them instead with a custodian that meets the full requirement, the net tangible assets it has to hold can fall away, subject to conditions on which custodian it appoints and what it knows of that custodian's financial standing. Incidental status turns on the custody being genuinely connected to the other services rather than offered in its own right.

Two things follow for the hosted route: the host has to hold the custodial authorisation and carry the capital that goes with the way your fund's assets are held, so a host that has only ever supported dealing authorisations may not be able to take the fund at all. Where it relies on an external custodian to keep its own capital requirement down, that custodian's appointment terms, its fees and what happens to the assets if the appointment ends become part of your structure rather than the host's private arrangement. Settle custody before choosing between the routes, because it moves the authorisation set and the capital together.

A host answering to your investors for conduct it did not authorise will sit above your governance. Professional indemnity cover deserves a specific question rather than a certificate of currency. These policies are ordinarily written on a claims made basis, so the policy answering for conduct during your appointment is whichever one is in force when the claim arrives, often years later. Establish whether the host's policy responds to you at all, whether your own cover sits above or below it, and negotiate run-off cover at the start of the relationship rather than at the end.

The anti-money laundering position has to be settled in writing before the first application form goes out. Obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) attach to the person providing the designated service, so whether the host, the trustee or both are the reporting entity decides who enrols with AUSTRAC, who holds the identification records, who lodges reports and who answers if that work was not done properly. Put it in the appointment agreement rather than a side letter, and make the records position survive termination.

Organisational competence decides most applications. Each responsible manager you nominate must meet one of ASIC's five options for demonstrating knowledge and skills. Four of them pair a knowledge component with a minimum period of experience: an industry-adopted or APRA-approved standard, a relevant degree plus a short industry course, or a relevant industry or product qualification, each with three years of relevant experience in the past five; or an individual assessment by an authorised assessor, with five years in the past eight. The fifth is a written submission for ASIC to assess. ASIC generally expects at least two responsible managers.

What ASIC tests is coverage rather than seniority. Every authorisation sought has to map to a named responsible manager whose experience actually supports it, which is where applications stall: a record built in retail advice does not evidence competence to provide custodial services or to operate a registered scheme. Where the business depends on one or two responsible managers, ASIC will generally impose a key person condition, which makes those individuals a term of the licence. The fit and proper test in section 913BA reaches further than most applicants expect, because the same question is asked about the applicant's officers, about anyone who controls the applicant, and about the officers of that controller.

The application is a set of proof documents rather than a form: a business description, a table mapping every authorisation to a named responsible manager, references substantiating the experience claimed, financial statements or a capital plan, and a description of your compliance and risk arrangements. ASIC can require further information by written notice, and an application can be taken to have been withdrawn if what it asks for is not lodged in time. What stretches a timetable is what generates those notices: experience that does not quite reach the authorisation sought, custodial or registered scheme authorisations, officers based overseas whose background checks take longer, and financial proofs that do not yet exist in audited form.

Base level financial requirements apply to every licensee: solvency and positive net assets, a cash needs requirement you can evidence, and reporting on compliance with those requirements through the audit. Custody moves you into the net tangible assets regime above, and operating a registered scheme brings its own calculation, the greater of $150,000, half a per cent of average scheme assets capped at $5 million, or 10% of average revenue. If you already hold a licence the route is a variation, assessed fresh for the part being added, so a responsible manager who supported a dealing authorisation does not automatically support custody or scheme operation.

Two features of the Act decide what ending looks like, and neither of them is in the agreement. The licensee may revoke an authorisation at any time by written notice, so the contractual notice period governs damages rather than authority, and the authority itself can go on the day the notice is given. A financial services licensee also cannot be the authorised representative of another licensee, so an appointment covering the same entity cannot survive the grant of that entity's own licence, and there is no overlap window in which both cover the fund.

The operational unwind belongs in the appointment agreement while the relationship is healthy, because none of it can be negotiated once notice has been served. So does the dependency underneath it, since ASIC action against the host, the loss of a person named in a key person condition, or the host leaving the business all stop your fund issuing for reasons unconnected to your own conduct.

A hosted arrangement suits a first fund with a defined strategy, a wholesale investor base, and a sponsor who has not yet assembled responsible managers who would survive the competence test. It buys a compliance framework and a licence that already exist, at the price of control and a dependency you do not manage. Your own licence suits a business that will run more than one strategy, a fund whose authority to issue has to be durable across a decade, and a team that can staff the responsible managers from experience a referee will confirm.

Because a licensee cannot be the authorised representative of another licensee, the move from one to the other is a dated event rather than a gradual transition. Either the appointment ceases as the licence takes effect on a single day, or the licence is taken in a different group entity and the trustee is authorised by that new licensee instead. Either way it touches the deed, the register, the offer documents, the custodian agreement and the AML enrolment at once, and the offer has to be closed while those documents disagree.