Barely Managing? Troubles with Agricultural Managed Investment Schemes

Managed investment schemes, particularly agricultural schemes, have run into difficulty in recent years as changes in tax deductibility, the Global Financial Crisis and other factors have seen a number of prominent collapses (such as Timbercorp Limited and Great Southern Limited) and the drying up of new investment. The collapses have inevitably raised issues about financial disclosure to investors who include shareholders of responsible entities and unit or interest holders in the schemes themselves, and ASIC has recently acted to issue guidance in this regard. They have also highlighted complexities in the insolvencies of such schemes and particularly the conflicting demands placed on responsible entities and their liquidators. They also give pause for an analysis of the responsible entity concept which is a merger of the formerly separate roles of manager and trustee set out under the old “prescribed interests” law. After fourteen years of operation it is unclear that the merger has been a significant improvement on the former position, at least from the point of view of interest holders in such schemes and where responsible entities have operated multiple schemes