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We’re regularly asked whether a client can buy an AFSL instead of applying for a new AFSL.
While it is possible to buy a company which holds an AFSL – whether you should and the associated implications are more complex which need to be explained.
An AFSL is not a separate asset and cannot be transferred to another company or person.
While you can’t buy an AFSL, you can purchase the entity that holds the AFSL. Like with any purchase of a business, there are risks associated in acquiring a business and appropriate due diligence should be undertaken.
In addition to the ordinary legal and commercial issues associated with purchasing a business, there are specific AFSL issues that clients should consider when negotiating the purchase terms. These include:
Post settlement, the AFSL entity will need to notify ASIC of the following changes:
Responsible manager appointments need to be notified to ASIC. ASIC will review the responsible manager mix to determine whether the AFSL entity continues to have the organisational competence to undertake the financial services authorised on the licence.
Where the AFSL contains a key person condition and responsible managers subject to the condition will no longer act, ASIC will review the AFSL variation and alternative responsible managers submitted to determine whether the AFSL entity has the appropriate organisational competence to appropriately carry out its activities.
ASIC will assess any change of control to determine whether those associated with the AFSL entity, including the new parent entity are fit and proper.