ASIC places interim stop order on APIL fund

Oksana Patron

30 September 2022

The Australian Securities and Investments Commission (ASIC) has placed an interim stop order on Australasian Property Investments Limited (APIL) from offering the APIL Essential Retail Income Fund to retail investors due to a non-compliant target market determination (TMD).

The move would be expected to protect retail investors from potentially investing in a fund that may not be suitable for their financial objectives, situation or needs, the regulator said.

The interim order, which is valid for 21 days unless revoked earlier, would stop APIL from issuing interests in, giving a product disclosure statement for or providing general advice to retail clients recommending investment in the Fund.

In its product disclosure statement for the fund, APIL disclosed that money invested in the Fund is not guaranteed and the monthly income distribution was based on assumptions and the actual results may be different to the forecast result.

“Given these features and risks, ASIC considers that the fund is not suited to the target market as defined in the TMD by APIL,” ASIC said in a statement.

ASIC also found that APIL did not meet the information requirements for the TMD and did not meet the appropriateness requirements under the design and distribution obligations (DDO) because the distribution condition was inadequate.

ASIC said it expected APIL to consider the concerns raised about the TMD and take immediate steps to ensure compliance.

“If ASIC’s concerns are not addressed in a timely manner, a final stop order will be placed on the Fund. APIL will have an opportunity to make submissions to ASIC before the final stop order is made,” the regulator said.

The Fund is invested in two shopping centres and is currently raising money to purchase a third shopping centre. The Fund borrows money to support its investment activities and investors in the Fund cannot withdraw their money until April 2029.