State President Kim Cox, State Secretary John Anderson and QRAMA Legal Adviser John Mahoney met with two Senior Officers of the ASIC in Sydney on May 24 - Geoff McCarthy, Principal Lawyer Regulatory Policy and Darren McShane, Director Managed Investments.

The purpose of the meeting was to discuss the impact of the MIA on management rights having particular regard to those issues raised in the QRAMA Professional.

Serviced apartment definition

We had argued strongly for the ASIC to define “serviced apartment complex” in a limited way. We sought a definition that in summary limited the term to self contained units available for overnight lettings and which are serviced on a daily basis.

Our arguments were strongly opposed by the ASIC.  It was again pointed out to us that quite deliberately the term had not been defined – it had been left open so as not to limit the types of complexes that the MIA would catch.  The ASIC reiterated the position adopted in its policy statement that typical management rights in holiday complexes up and down the Queensland coast were clearly caught by the MIA.

We maintained our position that in complexes where unit owners were free to live in their unit, lock it up, let it out through an on-site agent or utilise an external agent, the MIA should not apply.  Again the ASIC opposed us strongly.  The officers argued that because the “forced sale” provisions of the MIA had been reworked to the point where the development industry in particular was content with them, there should be few if any concerns for managers whose complexes will be subject to this MIA relief condition.

In similar fashion, the ASIC strongly opposed any relaxation of the principle that the new forced sale provisions will not apply where there has been a sale of any unit in the complex before March 1, 2000.  In those cases, the old forced sale provisions apply.  On behalf of QRAMA, John Mahoney is making a further submission for a further relaxation of that date, there being a number of purchasers of management rights who bought after the February announcement by the ASIC that it would relax the forced sale provisions. That announcement made no mention of the “no sales before March 1, 2000” prerequisite.

The problem that the management rights industry faces is that the Developers have largely achieved what they want and we don’t have them supporting us in seeking to change the ASIC’s policy.

MIA impact on existing management rights

On a brighter note, the ASIC showed a preparedness to resolving the critical issues that face existing managers who quite innocently fall foul of the MIA and its unintended consequences.

The ASIC is, as part of a review of its policy on the MIA, looking at ways to: 

• allow new managers who make reasonable enquiries to continue to take advantage of a closed  scheme exemption, even though it may transpire that a developer or associate still own units in the complex at October 1998; 

• allow managers who find themselves, through no fault of their own, in breach of the closed scheme or  well-advanced scheme relief provisions, to take advantage of the new (rather than the old) forced sale provisions; 

• extend the current 31 December 2000 deadline for developers to sell all units in a development where well-advanced scheme relief has been granted.