ASIC will allow AFS licensees that are lessees to include a right-of-use asset in the calculation of their net tangible assets, and, where the right-of-use asset is a current asset, adjust surplus liquid funds and surplus liquid funds.
To implement the changes, ASIC has updated:
- ASIC class order [CO 13/760] – Financial requirements for responsible entities and operators of investor directed portfolio services
- ASIC class order [CO 13/761] – Financial requirements for custodial or depository service providers
- ASIC class order [CO 12/752] – Financial requirements for retail OTC derivative issuers
- The standard licence conditions in ASIC Pro Forma 209 – Australian financial services licence conditions, and
- ASIC regulatory guide 166 – Licensing: Financial requirements.
The commission has also modified existing AFS licence conditions so that a right-of-use asset is deemed not to be an excluded asset.
Affected AFS licensees should review their financial-requirement calculations considering the changes, which are immediate.
ASIC previously issued a temporary ‘no-action’ position for AFS licensees about potential breaches of financial requirements that arise from recent changes to the accounting treatment of lease assets. The no-action position no longer applies.
Under s912A(1)(d) of the Corporations Act 2001, an AFS licensee is generally required to maintain adequate resources, including financial resources, to provide the financial services that it is authorised to provide under its licence terms. Requirements are specified in each AFS licence and are based on pro forma 209 and various ASIC legislative instruments.
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