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Conflicts of Interest

1. PURPOSE AND BACKGROUND

Under section 912A(1)(aa) of the Corporations Act 2001 Australian Financial Services Licensees must have arrangements in place for the identification and management of conflicts of interest. This Policy and its associated procedure set out the requirements applicable to the Australian Financial Service Licensees within the Group.

All employees are governed by Brookfield’s Code of Business Conduct and Ethics (the “Code”). The Code includes specific provisions relating to conflicts of interest and fiduciary duties. Certain conflicts of interest matters are also governed by the Personal Trading Policy. 

2. SCOPE

This policy applies to the following licensed entities:

  • Brookfield Funds Management Limited;
  • Brookfield Australia Funds Management Limited;
  • Brookfield Capital Management Limited;
  • Brookfield Capital Securities Limited; and
and is applicable to any employees or third party that undertakes services on behalf of a Licensee.

3. WHAT ARE CONFLICTS OF INTEREST?

In financial services, conflicts of interest may occur, when offering an opinion, reaching a judgment, or making a decision, the interests of investors are inconsistent with, or diverge from, some or all of the interests of the “Licensee” regardless of whether or not the competing interests affect a judgment.

The conflicts management obligation does not prohibit all conflicts of interest, it merely requires that conflicts of interest be acknowledged and managed.


4. MANAGING CONFLICTS OF INTEREST
Where a conflict arises between the interests of investors and those of a Licensee the conflict must be managed by:

  • 1. disclosing it;
  • 2. controlling it; or
  • 3. avoiding it.
It is not enough to simply disclose conflicts with investors. Where appropriate and possible, all conflicts with investors should be controlled or avoided.

Details of how each of the above mitigating strategies should be used are included in the AFS Licensee Conflicts of Interest and Related Party Dealings Procedure (“Procedure”).

5. RELATED PARTY DEALINGS
A Licensee acting as the Responsible Entity (RE) of a registered managed investment scheme (“Scheme”) must not give a financial benefit to a related party without the approval of the members of the relevant Scheme unless the giving of that benefit falls into one of the exceptions allowed under legislation. The requirements around related party transactions are located in Chapter 2E of the Corporations Act.


5.1 DEFINITIONS

Related Party

 

 

 


Any of the following:

  • An entity that controls the Licensee;
  • Any related body corporate of the Group;
  • A director of the Licensee;
  • A director of an entity that controls the Licensee; or
  • Spouses and de facto spouses, of such directors and the parents and children of directors and their spouses or de facto spouses.

Giving a financial benefit

 

 

 

 

 

Any of the following:

  • giving or providing a related party finance or property;
  • buying an asset from or selling an asset to a related party;
  • leasing an asset from or to a related party;
  • supplying services to or receiving services from a related party;
  • issuing securities or granting an option to a related party; or
  • taking up or releasing an obligation of a related party

5.2 EXCEPTIONS

Corporations Act ss210-216 contains a list of exemptions where member approval of related party benefits are not required. 

The exceptions are:

  • transactions are conducted at arm's length and on commercial terms or are less favourable to the related party than if the transaction was conducted at arm's length and on commercial terms;
  • the benefits is remuneration to a related party acting as an officer or employee and the benefit is reasonable in the circumstances;
  • the benefit is a payment of expenses incurred or to be incurred, or reimbursement for expenses incurred, by the related party in performing duties as an officer or employee of the Group or the RE and the benefit is reasonable in the circumstances;
  • the benefit is given to a related party in their capacity as an officer of the Group or RE and the benefit is an indemnity, exemption or insurance premium in respect of a liability incurred as an officer of a Group company or entity that is reasonable in the circumstances;
  • the benefit is given to a related party in their capacity as an officer of the Group or RE and the benefit is the making of a payment in respect of legal costs incurred by the officer in defending an action for a liability incurred as officer of the Licensee that is reasonable in the circumstances;
  • the benefit is given to a related party as a member of a Scheme and giving the benefit does not discriminate unfairly against the other members of the Scheme; or
  • a financial benefit is given under a Court Order.

5.3 ASX LISTING RULES
Where a related party transaction relates to a listed Scheme the RE of the Scheme (including any subsidiaries) must ensure that neither it, nor any of its subsidiaries, acquires a substantial asset from, or disposes of a substantial asset to, persons in a position of influence without the approval of the members or without the grant of a waiver by the ASX (ASX Listing Rule 10.1 Transactions with persons in a position of influence).

Please refer to the Procedure for additional requirements for ASX listed Schemes.


5.4 EXPERT ADVICE FOR DIRECTORS
The Directors of a Licensee acting as the RE of a Scheme must have enough knowledge or expertise to assess all aspects of proposed related party transactions. Where necessary, directors should obtain professional and expert advice from an appropriately qualified person.

Directors will need to satisfy themselves that it is appropriate to rely on the advice received and when relying on information and advice from others must make their own independent assessment of the proposed transaction.


5.5 INVESTMENT OPPORTUNITIES
Any decision to invest into an investment opportunity provided by the Group must be based upon the mandate of the Scheme(s) and consideration of any conflicts that may arise.

 

5.6 MEMBER MEETINGS
Company Secretariat is responsible for calling member meetings and will follow the process as set out in Corporations Act Part 2G.4 Division 4.


6 RECORD KEEPING
Every related party transaction must be fully and clearly documented. All identified conflicts, actual or potential, and related party transactions must be reported to Company Secretariat and recorded in the Conflicts Register.

Records relating to the management of conflicts of interest and related party transactions, including a copy of the Conflicts Register must be maintained for at least 7 years.


7 POLICY REVIEW
This Policy will be reviewed at least every two years and updated as required from time to time. This Policy will also be reviewed following relevant triggers such as:

  • A change to legislation
  • A significant change to the nature and/or complexity of a RE’s operations;
  • A significant change in the Financial Services Industry.


8. NON-COMPLIANCE WITH THIS POLICY

Incidents of willful non-compliance with this Policy are considered to be serious and may be grounds for legal action, dismissal or both.


 

 

©  2018 Brookfield Australia.