As of 1 July 2014, AFS licensees that are authorised to provide custodial or depository services have had to meet the new net tangible asset (NTA) requirements set out in ASIC class order [CO 13/761]. This is regardless of whether they actually provide such services.
However, there appears to be some misconception that licensees only have to comply if they are, in fact, providing a custodial or depository service. This may be due to the wording on the first page of Appendix 4 to ASIC regulatory guide RG 166, which refers to “if you operate a custodial or depository service”.
Nevertheless, the wording in the class order is quite clear – section 912AC (notionally inserted into the Corporations Act by the class order)
“applies to a financial services licensee that:
(a) holds an Australian financial services licence authorising it to provide a custodial or depository service; and
(b) is not:
-
(i) a body regulated by APRA that is not required to comply with paragraph 912A(1)(d); or
(ii) a market participant; or
(iii) a clearing participant.”
As such, any licensee that is authorised to provide a custodial or depository service should ensure that it meets the relevant NTA requirement, regardless of whether it, in fact, has commenced providing such a service.
If a licensee is unable to meet the required NTA, it will have to record this non compliance in its breach register. In addition, a licensee should consider whether it is a significant breach and, therefore reportable to ASIC