Change in control of AFS licensee

An AFS licence is subject to conditions prescribed by regulations in addition to the conditions imposed on the AFS licence certificate (s914A(8) of the Corporations Act 2001).

One of these conditions is that an AFS licensee which becomes aware of any change in control of the financial services licensee must notify us (reg 7.6.04(1)(i) of the Corporations Regulations 2001 (the Regulations)).

What is a change in control?

A change in control includes a transaction, or a series of transactions in a 12 month period, that results in a person having control of the financial services licensee (either alone or together with associates of the person) (reg 7.6.04(2)(a) of the Regulations).

Control means:

  • if the financial services licensee is a body corporate:

    • having the capacity to cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the financial services licensee, or

    • directly or indirectly holding more than one half of the issued share capital of the financial services licensee (not including any part of the issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital), or

  • the capacity to control the composition of the financial services licensee's board or governing body, or

  • the capacity to determine the outcome of decisions about the licensee's financial and operating policies. In determining whether a person has the capacity to determine the outcome of decisions about a financial services licensee's financial and operating policies, the following matters are taken into account:

    • the practical influence the person can exert (rather than the rights it can enforce)

    • any practice or pattern of behaviour affecting the financial services licensee's financial or operating policies is to be taken into account (whether or not it involves a breach of an agreement or a breach of trust).

Control is defined at reg 7.6.04(2)(b) of the Regulations.

When does ASIC need to be notified?

An AFS licensee must notify us of the particulars of the change in control not later than:

  • 10 business days for changes to controlling entity details for licensees other than body corporate licensees as defined by s922C of the Corporations Act 2001.
  • 30 business days for changes to controlling entity details for licensees who are body corporate licensees as defined by s922C of the Corporations Act 2001.

How does an AFS licensee notify ASIC of a change in control?

To notify ASIC of a change in control, an AFS licensee must lodge a Form FS20 Change of details for an Australian financial services licence (FS20). 

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Last updated: 20/10/2014 12:00