ASIC has cancelled the Australian financial services licence (AFSL) held by Devgroup Funds Management following concerns the company has failed to resolve ongoing breaches of its licence conditions.
Devgroup is the responsible entity for four unlisted residential property funds, of which one is non-operating, in Western Australia.
The licence cancellation has been agreed to by Devgroup which is now in discussions with parties to formalise the winding up of the four funds.
ASIC's decision to cancel Devgroup's licence comes after extensive discussion with the responsible entity regarding its inability to meet net tangible assets and reporting obligations under the Corporations Act 2001.
The cancellation of the company's AFSL is subject to a condition that the licence continues until 31 August 2011 to allow Devgroup to provide financial services that are reasonably necessary or incidental to the winding up of the funds.
Devgroup raised funds from investors in 2008 for investment in property funds offering interests in house and land subdivisions in three Perth suburbs.
Each investor chose a land site and house design from plan and paid an initial deposit. Additional financing was sought for purchase of the land and proposed construction costs.
Following the development's completion, investors were to pay the balance which would facilitate a transfer of title to the investor for their land and house package.
In deciding to exercise its power to cancel Devgroup's licence, ASIC said its primary consideration was the interests of investors in the funds operated by the responsible entity.
"ASIC expects AFS licensees to meet the conditions of their licence on an ongoing basis and will take steps to cancel a licence if a licensee is unable to meet these requirements," ASIC commissioner Greg Medcraft said.
