Promoters, Syndicates and Syndications
Horse racing and breeding schemes - offering of shares,
syndicating, promoting, management of such syndicates
Any person seeking to offer a horse for sale by shares or
syndication should be aware that such activity is regulated by the
Australian Securities and Investments Commission (ASIC) and must
read the information contained in the documents on this page
starting with "Steps
in Offering a Horse Racing Syndicate".
"Regulatory
Guide 91" provides the ASIC approach to these
schemes; Refer in particular to the "
Regulatory Guide 91 table 5". The PowerPoint presentation
called "Horse Racing
Schemes" explains the requirements in short
form.
Any person intending to syndicate a horse for racing or
breeding should read carefully all the explanatory documents and
take professional legal and accounting advice if
appropriate.
Briefly:
Does the syndicate fall within the definition of a 'managed
investment scheme'? A situation where:
• members of the syndicate contribute money to gain an interest
in the syndicate;
• the money is pooled in a common enterprise of horse racing to
produce winnings;
• the members do not have day to day control over the
syndicate
- may indicate a managed investment scheme
A managed investment scheme must be registered with ASIC.
However certain horse racing schemes (syndications) will qualify
for relief from direct registration with ASIC.
To qualify for relief the syndications
- must be conducted by a registered promoter, approved by the
lead regulator (control body for racing in each state)
- the promoter must hold an AFSL license
- a pre-approved product disclosure statement contains all
information made available to prospective clients
- syndicate contain no more than 20 members
- total amount sought is not more than $250,000
- syndicator must lodge reports with regulator as required
- meet all other requirements of ASIC and the lead regulator-
including obtaining advertising approval
- promoter must be a company.
Any person intending to syndicate a horse for racing or
breeding should read carefully all the explanatory documents and
take professional legal and accounting advice if appropriate.
Breaches of these regulations are punishable by fines
and imprisonment.
A breach of these regulations may entitle the acquirer
to void the contract.
For the purposes of calculating how many members a syndicate
has, joint holders of interests are counted as a single member.
Is the syndicate promoted by a professional promoter?
Unless the syndicate has more than 20 members the person who
starts up the syndicate must be in the business of promoting
syndicates which offer investors the opportunity to contribute
money to get an interest. The fact that someone is promoting a
single syndicate is not sufficient unless that syndicate is the
first in a business of promoting other such syndicates.
If the syndicate has more than 20 members or is promoted by a
professional promoter, the final consideration is whether the
syndicate has been advertised to investors.
Have interests in the syndicate been offered to investors?
The obligation to register the syndicate with ASIC will be
triggered upon the offering of interests in the syndicate to
investors.
If a promoter operates an unregistered syndicate they may be
liable for an offence under the Corporations Act as below:
- Failure to register a scheme that is required to be registered
is a contravention of the Corporations Act.
- The operator of a scheme commits an offence if it operates a
scheme that is required to be registered and may be liable to a
fine or imprisonment.
- A contract to acquire interests in such a scheme is voidable at
the option of the acquirer.
Documents and Application form:
PI
Insurance advice to ASF license holders
Regulatory Guide 126 March 2008 Insurance for ASFL
Application to be entered on the register of approved
promoters
