Establishing a managed investment scheme, plainly.

Registration is not a filing exercise. A registered scheme must have a single responsible entity, a constitution meeting the statutory content requirements, and a compliance plan lodged with ASIC before registration will be granted. These three elements are built to work together. The constitution sets out what the responsible entity may do and what members are entitled to. The compliance plan sets out how the responsible entity will make sure it actually does those things, and stays within the law while doing them. A scheme cannot be registered with only one or two of the three in place, and a scheme that later wants to change its responsible entity, vary its fee structure, or open a new distribution channel has to work through all three documents together, not just the one that changed.

The responsible entity, or RE, is the single entity Chapter 5C makes accountable for the scheme. It must be a public company and it must hold an Australian Financial Services Licence authorising it to operate the specific kind of scheme it runs. The RE is not simply a manager taking instructions from investors. It holds, or arranges custody of, scheme property, makes the investment and operational decisions the constitution allows it to make, and deals directly with members on registration, redemptions, reporting and disclosure.

Chapter 5C layers statutory duties on top of the RE's licence conditions: to act honestly, to exercise the degree of care and diligence a reasonable person in that position would exercise, to act in the best interests of members and to put members' interests ahead of its own where the two conflict, to treat members of the same class equally, and to keep scheme property separate from the RE's own property. General fiduciary principles sit underneath these statutory duties and inform how a court reads an RE's exercise of discretion, particularly around valuation, related party dealing and fee decisions. Members and ASIC each have standing to act where an RE falls short, up to and including its removal and replacement.

The constitution is the scheme's operating rulebook, and its statutory content requirements exist so that members know, before they invest, what the responsible entity can do with their money and what they are entitled to in return. A properly drafted constitution addresses the RE's powers and any limits on them, the fee structure and the mechanism for varying fees, how units or interests are priced and issued, when and how members can withdraw or redeem, meeting and voting rights, and the process for removing or replacing the RE.

The clauses that matter most are rarely tested until a scheme is under stress, most often around a valuation dispute or a decision to freeze or stagger withdrawals. A constitution copied from a template and never tailored to the scheme's actual assets and liquidity profile tends to be silent, or worse ambiguous, at exactly the moment certainty matters. Amendment is its own discipline. A constitution can generally be changed by special resolution of members, or unilaterally by the RE only where the change does not adversely affect members' rights, and sponsors who assume the RE can vary fees or redemption terms at will are usually wrong.

The compliance plan sets out the measures the responsible entity will apply to make sure the scheme is operated within the Corporations Act and the constitution. It covers matters such as how scheme property is valued and by whom, how conflicts of interest are identified and managed, how outsourced functions such as custody and administration are supervised, and how breaches are identified, escalated and reported. Where the RE's board does not have a majority of external directors, Chapter 5C requires a compliance committee to monitor the plan and to report departures from it to the board and, where the departure is serious, to ASIC.

The compliance plan is also subject to an annual external audit, and that audit is one of the clearest signals an institutional investor or a due diligence team looks for before committing capital to a scheme it does not already know. Treating the compliance plan as a document produced once for registration, rather than a live set of controls a compliance committee actually tests, is one of the more common and more costly mistakes made by new scheme sponsors.

The order in which the pieces come together matters, because the constitution and compliance plan cross reference each other, and the choice of responsible entity shapes both.

Two decisions made early in the process do more to determine how a scheme performs over its life than anything that follows. The first is whether the sponsor becomes its own responsible entity or appoints an existing AFSL holder to act as RE and trustee for the scheme. Building an AFSL authorisation from nothing is a genuine undertaking in its own right. Appointing an established RE shifts the licensing and governance burden to a party that already carries it, at the cost of some control over investment and operational decisions.

The second is treating the constitution and compliance plan as governance documents rather than paperwork produced to satisfy a registration checklist. A scheme built to be registered once and then left alone tends to show its weaknesses at the worst possible time: when redemptions spike, an asset needs revaluing, or an institutional investor's due diligence team asks to see the compliance committee's minutes. A scheme built with those pressures in mind from the outset holds up when they arrive.