Document ID: chunk:federal_register_of_legislation:F2022L00184:clause:1_21:p1
Version: federal_register_of_legislation:F2022L00184
Segment Type: clause
Provision Reference: sch 1 cl 21 (pt 1/2)
Character Range: 29190–31829

21  Investment limitations
 (1) The trustee of a *public ancillary fund must not *borrow money or maintain an existing borrowing of money.
Penalty: 30 penalty units.
 (2) However, subsection (1) does not prohibit a trustee from *borrowing money if:
 (a) the purpose of the borrowing is to enable the trustee to make a distribution, to a *deductible gift recipient, to comply with this instrument; and apart from the borrowing, the trustee would be unable to make the distribution; and
 (b) the period of the borrowing does not exceed 90 days; and
 (c) the borrowing, when made, would not result in total borrowings by the fund exceeding 10 per cent of the *market value of the fund's assets.
 (3) Subsection (1) also does not apply to the acquisition of a financial instrument excluded by the Commissioner, by written notice, from that subsection in relation to a fund.
 (4) The trustee of a *public ancillary fund must ensure the fund's investments are made and maintained on an *arm's length basis, unless another provision of this instrument allows otherwise.
Penalty: 30 penalty units.
 (5) The trustee of a *public ancillary fund must not give a security over, or in relation to, an asset of the fund.
Penalty: 30 penalty units.
 (6) However, subsection (5) does not apply to:
 (a) a financial instrument excluded by the Commissioner from that subsection in relation to a fund; or
 (b) an agreement to guarantee the repayment of any money lent by an arm's length creditor (including any related unpaid interest or fees) for the sole benefit of one or more *deductible gift recipients to which the fund may make a distribution.
 (7) The trustee of a *public ancillary fund:
 (a) must ensure the fund does not acquire an asset (except by way of gift) from; and
 (b) must not make a loan or provide any other kind of financial assistance to;
a founder of the fund, a *relative of the founder, a donor to the fund, a *relative of the donor, the trustee, a director, officer, agent, *member or employee of the trustee, or an *associate of any of these entities except:
 (c) by way of an arms' length commercial transaction; or
 (d) on terms each of which is more favourable to the fund than would otherwise be expected under an arms' length transaction.
Penalty: 30 penalty units.
 (8) The trustee of a *public ancillary fund must keep the assets of the fund separate from all other assets.
Penalty: 30 penalty units.
 (9) However, subsection (8) does not prevent a licensed trustee company (within the meaning of the Corporations Act 2001) or the public trustee of a State or Territory from operating common funds for investment purposes.