RG 166 Licensing: Financial requirements

Issued 1 July 2015

This guide sets out the financial requirements you must meet as the holder of an Australian financial services (AFS) licence. The requirements vary depending on the financial products and services you offer.

Subordination of debt

A Deed of Subordination is used where a licensee wishes to adjust its liabilities in order to meet certain financial obligations under its AFS licence.

To subordinate a loan a licensee must:

  • provide a Deed of Subordination, in triplicate, executed by the debtor and the lender, to ASIC for dating and execution. The Deed must be substantially in the form of ASIC Pro Forma 63 Deed of subordination (PF 63);
  • demonstrate that it will comply, or continue to comply, with its financial obligations after the loan has been subordinated - i.e. provide a current balance sheet not more than 3 months old and relevant financial calculations (e.g. NTA calculation), signed by a director; and
  • provide a covering letter outlining the purpose of the Deed of Subordination and requesting that ASIC date and execute the Deed.

To release a subordinated loan the licensee must:

  • complete a Deed of Mutual Release, in triplicate, and submit to ASIC for execution and dating. The Deed must be substantially in the form of Pro Forma 225: Deed of Mutual Release: Information to release a Deed of Subordination (PF 225);
  • demonstrate that it will continue to comply with its financial obligations after the loan has been repaid - i.e. provide a balance sheet not more than 3 months old and relevant financial calculations (e.g. NTA calculation), signed by a director; and
  • provide a covering letter requesting ASIC's consent to repay the loan.

Post these documents to:

ASIC
Licensing
GPO Box 9827
MELBOURNE VIC 3001

If you are a body regulated by the Australian Prudential Regulation Authority (APRA), as defined in s3(2) of the Australian Prudential Regulation Authority Act 1998 (APRA Act), and are not required to comply with s912A(1)(d) of the Corporations Act 2001 (Corporations Act), RG 166 does not apply to you.

Note: From 1 July 2015, if you are the holder of a registrable superannuation entity (RSE) licence from APRA that is also authorised to operate registered managed investment schemes, you will be required to comply with s912A(1)(d).

Download RG 166 (PDF 926 KB)

Read the regulation impact statement (PDF 338 KB)

Read the regulation impact statement (special custody assets) (PDF 383 KB)

Last updated: 03/05/2016 11:10