VIC In real estate, is it mandatory for a company or its trust account to have a credit license or an Australian Finance License?

[ksivasub]

I know that a company has purchased a property in its business name using its trust account. This trust account is funded possibly by the investors of that company and by the public. In this case, should the business that bought the property and/or the trust accounts of that business have a credit license or an Australian Finance License?

 

[zaffin]

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"
Based on the Corporations Act 2001 (Section 911A) of Australian legislation, businesses that engage in credit activities, such as lending, usually need to have an Australian credit license. However, just purchasing property on behalf of investors or stakeholders using a trust account does not necessarily qualify as a credit activity.

In relation to an Australian Financial Services (AFS) License, if we take into account the Australian Securities and Investments Commission Act 2001, Section 8; a company might require an AFS License if it provides financial product advice, deals in financial products, makes a market for a financial product or provides a custodial or depository service. This would include operating a registered scheme, offering crowd-funding services, or operating a peer-to-peer lending platform. But simply holding or acquiring property doesn't generally fit into these categories, unless it's part of a broader financial service or product that's being provided.

Key references in regards to this case would be ASIC Class Orders [CO 13/1410] and [CO 13/761]. These Class Orders highlight the requirements for financial services licensees, particularly in relation to providing a custodial or depository service. It is suggested that these guidelines be adhered to avoid any legal complications.

However, each scenario can be different, and these responses are based on a general understanding of the law. A proper legal advisor should be consulted with knowledge of the specific circumstances and the details of Australian law for a more accurate understanding. Any particular cases or disputes may dictate different procedures and interpretations, such as whether this trust account is being used to offer an investment scheme or financial product, which can necessitate a specific license. For example, the case of Australian Securities and Investments Commission v Macdonald (No 12)[2009] NSWSC 714 would be worth reviewing, as it presents a valuable precedent for how a corporation’s actions can impact its licensing requirement"

 

[ksivasub]

ksivasub, check out this new legal ai tool I've been using. It's a big slow as they build it but pretty awesome and free https://legalmind.com.au . It's pretty epic, it produced


"
Based on the Corporations Act 2001 (Section 911A) of Australian legislation, businesses that engage in credit activities, such as lending, usually need to have an Australian credit license. However, just purchasing property on behalf of investors or stakeholders using a trust account does not necessarily qualify as a credit activity.

In relation to an Australian Financial Services (AFS) License, if we take into account the Australian Securities and Investments Commission Act 2001, Section 8; a company might require an AFS License if it provides financial product advice, deals in financial products, makes a market for a financial product or provides a custodial or depository service. This would include operating a registered scheme, offering crowd-funding services, or operating a peer-to-peer lending platform. But simply holding or acquiring property doesn't generally fit into these categories, unless it's part of a broader financial service or product that's being provided.

Key references in regards to this case would be ASIC Class Orders [CO 13/1410] and [CO 13/761]. These Class Orders highlight the requirements for financial services licensees, particularly in relation to providing a custodial or depository service. It is suggested that these guidelines be adhered to avoid any legal complications.

However, each scenario can be different, and these responses are based on a general understanding of the law. A proper legal advisor should be consulted with knowledge of the specific circumstances and the details of Australian law for a more accurate understanding. Any particular cases or disputes may dictate different procedures and interpretations, such as whether this trust account is being used to offer an investment scheme or financial product, which can necessitate a specific license. For example, the case of Australian Securities and Investments Commission v Macdonald (No 12)[2009] NSWSC 714 would be worth reviewing, as it presents a valuable precedent for how a corporation’s actions can impact its licensing requirement"

Once again thank you, Zaffin. I guess for the situation I posted, a credit license is not required!!