ASIC confirms increase to NTA requirements for fund managers

by Alanah McAliece

ASIC has confirmed that the net tangible asset thresholds applying to responsible entities and certain other retail fund operators will increase from 1 July 2027. In our earlier article, ASIC set to increase capital requirements for fund managers, we outlined the options ASIC was considering under Consultation Paper 388. ASIC has now confirmed it has adopted the most limited of those options.

What is changing?

ASIC will amend the financial requirements applying to:

  • responsible entities of registered managed investment schemes;
  • operators of investor directed portfolio services; and
  • corporate directors of retail corporate collective investment vehicles.

The existing monetary thresholds will increase to reflect inflation between June 2013, when the thresholds were last updated, and March 2026. ASIC will also introduce annual indexation so that the thresholds remain current.

The revised thresholds commencing on 1 July 2027 will include the first annual indexation adjustment.

ASIC will amend ASIC Corporations (Financial Requirements for Responsible Entities, IDPS Operators and Corporate Directors of Retail CCIVs) Instrument 2023/647 and update Regulatory Guide 166 AFS licensing: Financial requirements before the changes commence.

ASIC adopts the CPI-based increase

ASIC considered three options under Consultation Paper 388, including more substantial increases to the concessional NTA requirement and the $5 million fund-assets cap. It has instead adopted the CPI-based option, which received the greatest support during consultation.

Based on ASIC’s indicative figures, the changes were expected to increase:

  • the $150,000 minimum to approximately $200,000;
  • the $500,000 threshold for certain Tier $500,000 class assets to approximately $700,000;
  • the $5 million fund-assets cap to approximately $6.9 million; and
  • the $10 million minimum to approximately $13.8 million.

The final thresholds applying from 1 July 2027 may differ because they will include the first annual indexation adjustment.

What does this mean for fund managers?

Affected fund operators should assess whether they will need to:

  • contribute additional capital;
  • update their NTA forecasts and monitoring procedures; and
  • review the composition and liquidity of their assets and any related funding arrangements.

The NTA requirement also includes liquidity components. Responsible entities must generally hold at least 50% of their required NTA in cash or cash equivalents, subject to the applicable minimum, and 100% in liquid assets. The increased thresholds may therefore increase the amount that must remain readily available.

Next steps

The changes will commence on 1 July 2027, giving affected fund operators approximately 11 months to prepare.

Responsible entities, IDPS operators and corporate directors should assess their projected NTA position under the higher thresholds well before commencement. This will be particularly important for smaller operators, businesses applying for a new AFS licence and responsible entities operating close to the existing minimum.

For more information, contact Chris Mee at cmee@cnmlegal.com.au or Alanah McAliece at amcaliece@cnmlegal.com.au, or call 07 3211 4010.

This paper is produced as general information in summary for clients and should not be relied upon as a substitute for detailed legal advice or as a basis for formulating business or other decisions. CNM Legal asserts copyright over the contents of this document.