Illegal managed investment schemes
Checklist for investor protection
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 legal.
Check the managed investment
is offered by a public company
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 must:
- prepare financial statements
- have its financial statements audited by a registered company
- lodge its financial statements with ASIC so that anyone can
purchase a copy.
You can buy 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 (AFS) licence. That means the
company holds a specific licence to operate a managed investment
You can check if the company holds an AFS licence by searching
ASIC Connect's Professional Registers.
Having an AFS 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
The managers of the scheme 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.
Find out more about what an AFS licence means.
Check the 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
Always check that a managed investment scheme is registered
before you invest.
Every registered scheme is on ASIC's public database.
Registering each scheme means ASIC can check that the manager
operates only the kinds of schemes permitted under their
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 sure you
really understand it and that it's suitable for you. Otherwise,
stick to registered schemes and take advantage of the protections
If you're offered units in a managed investment,
check that it is registered or you won't have important legal
Last updated: 24 Oct 2018