Illegal managed investment schemes
Keep it legal
It's generally illegal to offer units in a managed investment
scheme unless it is registered with ASIC. Here are some basic
safety checks to help you confirm a managed investment is
Check it's a public
A registered managed investment scheme must be run by a public
company that has registered with ASIC to do this.
You can see if the company exists by checking ASIC Connect and searching
within 'organisation and business names.' It will also have
'Ltd' after its name (not the 'Pty Ltd' of a private company).
A public company has to:
- Prepare financial statements
- Have them audited by a registered company auditor
- Lodge those financial statements with ASIC so that anyone can
purchase a copy
You can purchase copies of these financial statements from information brokers or from ASIC's service centres.
Check the company holds a
A company running a registered managed investment scheme must
have an Australian Financial Services licence. That means the
company holds a specific licence to operate a managed investment
You can check if the company holds a licence by searching ASIC
Connect's Professional Registers.
Having a licence means the scheme operators (sometimes called
'managers') must meet a set of basic standards. For example, a
licensee must carry professional insurance and have systems to deal
with investor complaints if anything goes wrong. They must set
up systems to run their scheme efficiently, honestly and
Find out more about what an AFS
The managers will have to:
- Receive and account for investors' money
- Invest funds and check performance
- Distribute profits
- Return cash to investors if they wish to sell their units
Check the scheme is
Always check that a managed investment scheme is registered
Check if the scheme is registered as a managed investment scheme
by checking ASIC Connect and searching
within 'organisation and business names.' If it's not
registered, it may be an illegal scheme and you will lose important
Every registered scheme is on our public database. Registering
each scheme means ASIC can check that the manager operates only the
kinds of schemes permitted under their licence.
Some exceptions exist for schemes that are only open to
wholesale investors or for some schemes with fewer than 20 members.
If you are offered the chance to put money into an unregistered
scheme on the basis that it has a special exception, make certain
you really understand it inside out, and that it's suitable for
you. Otherwise, stick to registered schemes and take advantage of
the protections in place.
If you're offered units in a managed investment,
check that it is registered or you won't have important legal
Last updated: 04 Nov 2016