Racehorse syndications are deemed to be a Managed Investment Scheme (MIS) as defined by the Australian Securities and Investment Commission (ASIC), if the following occur:
- People contribute money to acquire rights to benefits produced by the scheme;
- Contributions are pooled;
- Members do not have day-to-day control over the operation of the scheme.
Our view is that the majority of syndications in Australia meet these conditions, and could therefore be considered a MIS.
Thankfully, ASIC have provided relief to some of the requirements of a MIS, for racehorse syndications with a total commercial value less than $500,000 and no more than fifty (50) subscribers.
ASIC allows for joint regulation of such syndications by its appointed Lead Regulators – the Principle Racing Authorities (PRA’s) in each state.
Any person or business that regularly promotes horse racing syndicates must first satisfy three conditions:
- Hold an Australian Financial Services Licence (AFSL) with ASIC, to deal in Horse Racing Schemes and provide general financial advice;
- Comply with the Corporations Act 2001;
- Be approved by the relevant Principle Racing Authority in their state.
We, Kinematic Thoroughbreds Pty Ltd, are an Approved Promoter with Racing Victoria, Racing New South Wales and Thoroughbred Racing SA, and a holder of AFSL 452499. We therefore meet the above primary conditions.
Below are our policies for meeting ASIC ‘s and Racing Authority regulations for each horse racing scheme we offer.
Our Racehorse Promotion Policies
1.1 The principle purpose of each scheme offered by us is the racing of a Horse or Horses described in each Product Disclosure Statement (PDS) issued.
1.2. We will always hold an AFSL for the life of any scheme, and not breach any conditions that are included in our AFSL.
1.3. There will be at no time more than 50 participants.
1.4. The total amount sought from the issue of scheme interests to participants will not exceed $500,000.
1.5. We will provide the relevant Principle Racing Authority (PRA) with a copy of each of the following documents:
- Any information, including any PDS in relation to each scheme, provided by us to an offeree.
- Any advertisement in respect of each scheme.
- Any finance lease proposed to be used by participants in each scheme.
1.6. We will not provide an offeree with a PDS unless it has received the prior approval of the relevant PRA.
1.7. We will not, without the prior approval of the relevant PRA, advertise scheme interests or publish any statement that is reasonably likely to induce people to acquire scheme interests.
1.8. We will hold all application monies in a separate account with an Australian bank. All application monies received with Applications for Shares which are not accepted by us, will be returned to Applicants along with interest (if any) earned.
1.9. We will register each scheme with the relevant PRA within 45 days of the scheme being fully subscribed.
1.10. We will ensure that the participants in the scheme receive unencumbered title to the whole of the scheme horses prior to registration of the scheme with the relevant PRA.
1.11. If any scheme is not fully subscribed within six (6) months after the date on which the PDS is approved by the relevant PRA, we will repay all money received from any person who applied to participate in the scheme, together with interest (if any) which accrued in respect of that money, within 10 business days after the expiry of that six month period. In certain circumstances, we may apply for a replacement PDS to continue selling shares. In other circumstances the trainer may purchase the remaining unsubscribed shares to complete the subscription and share the ownership in the horse with you as a co-owner.
1.12. In an instance when the trainer retains a share in the horse, the share is a commercial investment and the appropriate fees are apportioned to them as they are to all co-owners.
1.13. We will ensure all dealings with suppliers in respect of the horse will be entered into on commercial terms and at market rates.
1.14. We will maintain membership of the Financial Ombudsman Service which provides access for all parties to a dispute resolution service, should a dispute ever arise.
1.15. We will maintain professional indemnity insurance.
1.16. We will maintain a Surplus Liquid Assets (SLA) ratio that complies with the regulations set out by ASIC as a condition of our AFSL.