Since 2010 several Asia-Pacific Economic Cooperation (APEC) economies have been involved in creating a framework for this initiative, and on 20 September 2013 a Statement of Intent was signed by Australia, Singapore, New Zealand and South Korea (Philippines and Thailand have since joined).
A consultation paper outlining the passport and how it will be implemented was released on 16 April 2014.
Full mutual recognition will not be possible, given that participating economies have different regulatory systems and are at varying stages of development. However, the passport seeks to implement partial mutual recognition through a combination of the laws and regulations of the home economy in which the CIS originates, and of the host economy in which the CIS is to be offered, as well as a set of passport rules which will apply consistently to all passport funds.
For example, home economy rules will apply to elements such as the duties of operators, good standing, capital adequacy and operational requirements. The passport rules will also apply to some of the elements covered by the home economy rules, as well as exclusively governing basic eligibility criteria. Host economy rules will generally only apply to dealings with investors, namely disclosure requirements, distribution and licensing, and complaints.
In order to implement the passport, member economies will need to ensure that their regulators can authorise, administer and supervise passport funds in accordance with the home and host economy laws and regulations, and the passport rules. Passport funds will have a continued obligation to comply with the passport rules, and laws and regulations of the economies involved.
Public consultation has been invited and submissions close on 11 July 2014. Australian fund managers should contribute to the process and familiarise themselves with the opportunities and consequences of this initiative for their business.
Economies that wish to become passport member economies will collaborate to finalise arrangements by early 2015 with a view to the passport commencing in 2016.