3.7 AFS Licence conditions

The type of AFS Licence required to engage in the activity of offering interests in small-scale horse racing schemes which comply with the terms of the ASIC Instrument is a restricted licence for this activity only. The conditions of this type of licence are not as onerous on the licensee as the conditions of an unrestricted licence of the type required to enable the licensee to engage in the activity of offering shares in registered schemes.

A comparison of the different net tangible asset (“NTA”) and surplus liquid funds (“SLF”) requirements for a restricted and unrestricted AFS Licence best illustrates this point:

  1. the minimum NTA for a restricted licence is $50,000, compared to $150,000 for an unrestricted licence; and
  2. the minimum SLF for a restricted licence is $50,000, compared to $150,000 for an unrestricted licence.

Such conditions and requirements are imposed to ensure that a licensee, responsible for handling client money, has assets and funds of its own sufficient to maintain the financial viability of its business.