Investors - What if my ability to withdraw or redeem my investment has been frozen?

What if my ability to withdraw or redeem my debenture investment has been frozen?


A withdrawal (or redemption) freeze on your investment does not necessarily mean that the company you have invested in is insolvent. If you have been informed that your ability to withdraw your investment has been frozen and you are concerned, you should contact your investment company for further information. The investment company should be able to tell you why your investment has been frozen and for how long. You may find that the freeze is only temporary and for a defined period of time e.g. six months.

If it becomes apparent that there are insufficient funds available to meet withdrawal claims from investors, it is possible that the investment company may be wound up.

If you are concerned about a freeze on redemptions of an investment company, you can obtain a copy of the most recent prospectus. You should be able to obtain a copy directly from your investment company or their website.

The prospectus should be able to tell you:

  • whether your investment is secured or unsecured
  • whether you are entitled to claim early redemption and, if so, under what circumstances. Some investments only allow early redemption where you can demonstrate, for example, that you are faced with unforeseen or exceptional circumstances of hardship – even then you may only be entitled to redeem your investment at the sole discretion of the scheme or investment company
  • under what circumstances the investment company is considered to be in default in accordance with the terms of the debenture. For example, the investment company may only be in default after it fails to pay your original investment and interest on maturity and this failure continues for a period of three months.
  • Who to contact to raise any concerns or complaints that you may have in relation to your investment.


You should consider seeking financial advice about how a freeze on withdrawing your investment will affect your personal circumstances. This will ensure that you are able to make the most informed decision in relation to your financial future.

If you are experiencing financial hardship you can contact Centrelink or the Department of Veterans Affairs as you may be eligible for a temporary exemption under the hardship provisions or some other form of assistance. 
 

What if my ability to withdraw or redeem my interest in a managed investment scheme has been frozen?


If you have been informed that your ability to withdraw your investment has been frozen and you are concerned, you should contact your scheme investment manager for further information. The investment manager should be able to tell you why your investment has been frozen and for how long. You may find that the freeze is only temporary and for a defined period of time e.g. six months.

If it becomes apparent that there are insufficient funds available to meet withdrawal claims from investors, it is possible that the scheme may be wound up.

If you are concerned about a freeze on redemptions of a managed investment scheme, you can obtain a copy of the product disclosure statement. You should be able to obtain a copy directly from your scheme's investment manager or their website.

The product disclosure statement should be able to tell you:

  • if your fund was liquid or illiquid when the product disclosure statement was current – whether a scheme is liquid or illiquid may affect your ability to withdraw your investment from the managed investment scheme
  • if and when distributions will be paid – distributions are not always paid at regular intervals and there may be periods in which no distributions are made.
  • who to contact to raise any concerns or complaints that you may have in relation to your investment.


You can also obtain a copy of the constitution of the scheme, which sets out the rules and regulations governing the conduct of the scheme. You can obtain a copy of the constitution from the scheme's investment manager. The constitution should outline some of your rights as a member as well as give you an understanding of the winding up process of your particular managed investment scheme.

You should consider seeking financial advice about how a freeze on withdrawing your investment will affect your personal circumstances. This will ensure that you are able to make the most informed decision in relation to your financial future.

If you are experiencing financial hardship you can contact Centrelink or the Department of Veterans Affairs as you may be eligible for a temporary exemption under the hardship provisions or some other form of assistance.

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Last updated: 23/03/2016 03:09