If you pool money from more than a couple of passive investors to fund a development, you are probably running a managed investment scheme (MIS), whether you meant to or not. That single fact decides how much compliance sits on top of your raise: whether you have to register the scheme with the Australian Securities and Investments Commission (ASIC), whether you need an Australian Financial Services Licence (AFSL), and whether each investor gets a regulated disclosure document. It applies from the moment you accept the money, not from the moment someone complains.
Most of what ranks for “managed investment scheme” explains the regime for the person writing the cheque, or for fund administrators who run schemes for a living. This guide is for the developer on the other side of the table: you have a site, a feasibility that stacks, and an equity gap you cannot fill from your own balance sheet. The useful questions are whether your raise is a managed investment scheme (MIS) at all, what turns the heavy registration machinery on, which exemptions keep it off, and what the whole thing does to your cost of capital and your margin. Every figure and threshold here is current as at August 2026, but rules and dollar amounts move, so treat each one as a prompt to verify against the primary source rather than a settled fact. None of it is legal or financial advice: the regime turns on your facts, so use this guide to brief your lawyer, not to replace them.
This guide sits alongside the companion piece on raising equity through a property syndicate, which walks through the mechanics of a raise. Here the focus is narrower and earlier: the managed investment scheme (MIS) regime itself, and how to stay on the right side of it.
Is my capital raise a managed investment scheme?
Your raise is a managed investment scheme (MIS) if it meets three tests at once, and most developer equity raises meet all three. The definition sits in section 9 of the Corporations Act 2001 (Cth), and it does not care what you call the arrangement. A “joint venture”, a “club deal”, a “friends and family round” or a “unit trust” can each be a managed investment scheme (MIS) if the substance fits.
The three elements are:
First, people contribute money or money’s worth to get an interest, meaning a right to benefits the scheme produces. Your investors put in cash (or land) in exchange for units, shares, or a contractual entitlement to a share of the profit.
Second, those contributions are pooled, or used in a common enterprise, to produce financial benefits or interests in property for the people who hold interests. Twelve investors’ money going into one development, with returns shared in proportion, is textbook pooling.
Third, the members do not have day-to-day control over the operation of the scheme. If your investors hand you the money and let you run the project, they generally lack day-to-day control, even if they get to vote on major decisions or be consulted.
Tick all three and you are operating a managed investment scheme (MIS). ASIC’s own plain-English description frames it the same way: multiple investors contribute money and get an interest, the money is pooled or used in a common enterprise, and the members do not run it day to day.
What is usually not a managed investment scheme
An arrangement generally sits outside the managed investment scheme (MIS) regime where the participants are genuinely active rather than passive. A true joint venture between two or three developers who each take a real operational role, share decisions, and are not simply handing money to a manager tends to look like a partnership or a joint venture, not a pooled passive investment. The line that matters is the third element: do the participants have day-to-day control, or are they relying on your effort to produce their return?
A straight loan is also generally outside the regime. If an investor lends you money at a fixed rate of interest, secured or unsecured, they are a lender, not a member of a scheme, because they are not sharing in the enterprise’s financial benefits through a pooled interest. This is one reason some developers who want to keep a raise simple use debt instead of pooled equity, for example mezzanine finance, where a single lender or a small club sits behind the senior debt on agreed loan terms. Where debt shades into a pooled, profit-linked, passively held product, though, it can slide back into being a managed investment scheme (MIS), so the label “loan” does not settle the question on its own.
Why calling it a joint venture does not save you
Labels do not change the legal substance. If your “joint venture agreement” describes ten passive investors putting money into a trust you control, in the expectation that your work produces their return, a court or the regulator will generally treat it as a managed investment scheme (MIS) regardless of the heading on the document. The safe working assumption is that pooling passive investors’ money to fund a development is a managed investment scheme (MIS) unless you have specific legal advice that a genuine exemption or a genuinely active structure takes you outside it. Guessing wrong here is expensive, because the obligations attach automatically.
What changes the moment you are running a scheme
Once your raise is a managed investment scheme (MIS), you are no longer just building a building. In the eyes of the law you are dealing in a financial product, and that pulls in a chain of duties that a pure construction project never carries. You may need to register the scheme, you generally need to be licensed to issue interests in it, and you owe your investors obligations that can attach to you personally and to your corporate entity if you get it wrong.
The three questions that follow set your compliance bill, and they are best answered in this order:
Are your investors wholesale clients or retail clients? This single answer drives almost everything else.
Must you register the scheme with ASIC? Registration is the heavy, expensive end of the regime, and most developer schemes are structured specifically to avoid it.
Do you need an Australian Financial Services Licence (AFSL), and how will you hold or access one? Licensing does not disappear just because a scheme is small or unregistered.
Work them in that sequence, because a decision at the top changes the answer below it. Getting the wholesale-or-retail question wrong, in particular, can turn a light-touch raise into one that needs a registered scheme, a full disclosure document, and a licensed responsible entity.
Wholesale or retail: the answer that sets your whole compliance bill
Raise only from wholesale clients and the managed investment scheme (MIS) machinery stays light. Take in even one retail client outside an exemption and it gets heavy. This is the first thing to nail down, because registration, disclosure and much of the licensing burden all turn on it. An investor is a wholesale client for interests in a managed investment scheme (MIS) where they meet one of the tests in section 761G of the Corporations Act (and the related section 761GA). Anyone who is not a wholesale client is a retail client, and retail clients get the full protective regime.
The four tests a developer will actually meet are below. Each is worth understanding because they carry different paperwork, and a common way to fall over is to rely on the wrong one or to hold the wrong evidence.
The product value test (the $500,000 parcel)
An investor is generally treated as a wholesale client if the amount payable for the interest is at least $500,000. For a scheme with a high minimum subscription, this is often the cleanest path: if every investor commits $500,000 or more to a single parcel, each can qualify as wholesale on the size of their investment alone, with no certificate needed. There are anti-avoidance rules to stop one large investment being artificially split to manufacture the outcome, so it should apply to genuine single subscriptions, not to a $500,000 figure carved into smaller real interests.
The individual wealth test (the accountant’s certificate)
An investor is generally a wholesale client if a qualified accountant has certified, within the last two years, that they have net assets of at least $2.5 million, or gross income of at least $250,000 in each of the last two financial years. The certificate is the document that protects you, and the net assets figure can include the family home. Two mistakes recur here: accepting a certificate that is stale (older than 24 months), and relying on an investor’s own say-so about their wealth without holding a current certificate before you issue the interest. Neither protects you if the position is later challenged.
Professional investors
A narrower category, the professional investor defined in section 9 of the Corporations Act, captures holders of an Australian Financial Services Licence (AFSL), entities regulated by the Australian Prudential Regulation Authority (APRA), listed entities and their related bodies, trustees of large superannuation funds, and persons who have or control gross assets of at least $10 million. Professional investors are wholesale clients without any certificate. For most developer raises the relevant members of this group are family offices, institutional co-investors, or substantial private entities.
The sophisticated investor test
The sophisticated investor test in section 761GA of the Corporations Act lets an Australian Financial Services Licence (AFSL) holder treat an investor as wholesale where the licensee forms, and documents, a reasonable view that the investor has enough previous experience to assess the merits and risks of the product without a disclosure document. This test only works where a licensed party is genuinely involved, and it depends on a real, recorded assessment, not a tick-box. It is also the test most likely to change, as the reform note at the end of this guide explains.
Why the distinction matters to your margin
If every investor is a wholesale client, you generally do not need a registered scheme, you do not need to give a Product Disclosure Statement (PDS), and your disclosure can be an Information Memorandum on terms you control. You still usually need a licence in some form, and you still owe duties to investors, but the architecture is far lighter and far cheaper. Let a retail client in outside an exemption and you can trigger registration, a full Product Disclosure Statement (PDS), a responsible entity, and the design and distribution obligations all at once. That is why most developer capital raises in Australia are typically built as wholesale-only. The wholesale-or-retail split is not a technicality. It is the biggest single lever on the cost of your raise, and therefore on the return the deal has to clear before your investors and you get paid.
When must I register the scheme with ASIC?
A managed investment scheme (MIS) must generally be registered if it has more than 20 members, or was promoted by someone in the business of promoting schemes, unless every interest was issued without needing a Product Disclosure Statement (PDS). That exemption is the escape hatch most developer schemes rely on. The rule sits in section 601ED of the Corporations Act, and getting it right is what keeps a raise out of the expensive end of the regime.
The more-than-20-members trigger, and how members are counted
The headline trigger is more than 20 members. How you count them matters. Joint holders of a single interest count as one member. An interest held on trust for a beneficiary is generally counted as held by the beneficiary, not the trustee, where the beneficiary is presently entitled to the income or capital or can control the trustee, so you cannot dodge the count by having one nominee hold for many. The regulator can also determine that several closely related schemes must each be registered once their combined membership passes 20, which stops a large raise being sliced into a series of 20-member schemes that are really one enterprise.
The “in the business of promoting schemes” trigger
Registration can also be triggered where the scheme was promoted by a person who was, at the time, in the business of promoting managed investment schemes. A developer doing a single raise for a single project is not usually in that business. A developer building a repeatable syndication pipeline, marketing scheme after scheme, may be, which is one reason serial sponsors more often end up inside a licensed, structured arrangement rather than doing it themselves each time.
The wholesale exemption that keeps most developer schemes unregistered
Here is the exemption that does the work. Under section 601ED(2), a scheme does not have to be registered if none of the interests issued required a Product Disclosure Statement (PDS). Because interests issued to wholesale clients never require a Product Disclosure Statement (PDS), a scheme raised entirely from wholesale clients can generally stay unregistered even with more than 20 wholesale members. This is the structural backbone of most developer raises: keep the register wholesale-only, and the scheme can typically remain an unregistered wholesale scheme, avoiding the responsible-entity and registration burden entirely. You still need to deal with licensing, covered further down, but you avoid the heaviest machinery.
The small-scale offering exemption (the 20/12/$2 million rule)
There is a second, narrower route that lets a limited amount of retail money in without a Product Disclosure Statement (PDS). Under section 1012E of the Corporations Act, personal offers of interests in a managed investment scheme (MIS) do not need a Product Disclosure Statement (PDS) if, in any rolling 12-month period, they result in interests being issued to no more than 20 people and raise no more than $2 million. This is the 20/12 rule. Two things trip developers up. The count and the dollar cap generally exclude issues to investors who did not need disclosure anyway, so your 20 people and $2 million are effectively the retail headroom on top of your wholesale base, not a cap on the whole raise. And the offers must be personal offers, made to people with a prior connection who are likely to be interested, not general advertising or a public solicitation. Used properly, the 20/12 rule lets a handful of trusted non-wholesale investors into an otherwise wholesale scheme. It is not a way to scale a retail raise.
What a registered scheme actually requires (and why developers avoid it)
A registered managed investment scheme (MIS) needs a public-company responsible entity holding the right licence, a compliant constitution, a compliance plan, custody arrangements, and ongoing reporting, which is why most developer raises are structured to stay unregistered. If you cannot avoid retail investors and cannot fit an exemption, this is the machinery you are signing up for, and it is worth knowing what it costs before you commit.
Under section 601FA of the Corporations Act, the responsible entity of a registered scheme must be a public company that holds an Australian Financial Services Licence (AFSL) authorising it to operate the scheme. That responsible entity carries the legal responsibility for the scheme and owes statutory duties to members. Standing one up, or engaging one, is a significant cost and governance commitment in its own right.
The scheme also needs a constitution that meets the content requirements ASIC sets out in Regulatory Guide 134 (Funds management: Constitutions), and a compliance plan with the oversight arrangements described in Regulatory Guide 132 (Funds management: Compliance and oversight), which ASIC updated most recently in June 2025. ASIC’s own guide to registering a scheme sets out the lodgement steps and the documents you need to file.
For a retail property scheme specifically, there is an extra disclosure layer. ASIC’s Regulatory Guide 46 (Unlisted property schemes: Improving disclosure for retail investors) asks responsible entities of unlisted property schemes to address a set of benchmarks and disclosure principles covering gearing, borrowing, valuations, related-party dealings and distribution practices, so retail investors can compare risk across schemes. On top of that, a retail raise brings the design and distribution obligations: the issuer must prepare a target market determination describing the class of investors the product suits, and take reasonable steps to keep distribution consistent with it. The cumulative weight of a responsible entity, a constitution, a compliance plan, a Product Disclosure Statement (PDS), the property-scheme disclosure benchmarks, and the design and distribution obligations is exactly why retail property schemes are usually run by established fund managers, not individual developers doing an occasional deal.
Do I need an Australian Financial Services Licence (AFSL) to run an unregistered wholesale scheme?
Generally yes. Issuing interests in a scheme is “dealing” in a financial product, and running the scheme often involves giving financial product advice, both of which usually require an Australian Financial Services Licence (AFSL) even when the scheme is unregistered and wholesale-only. This surprises a lot of first-time sponsors, who assume the licensing question goes away once they have confirmed they do not need to register. It does not.
ASIC’s Information Sheet 251 is direct: a trustee that issues, varies or disposes of interests in an unregistered scheme generally must hold an Australian Financial Services Licence (AFSL) authorising it to deal in interests in a managed investment scheme (MIS). Importantly, ASIC treats the trustee issuing an interest as acting as a principal, so the trustee generally cannot rely on being someone else’s authorised representative to cover that issuing activity. That nuance catches sponsors who assume operating “under” a friendly licensee’s Australian Financial Services Licence (AFSL) covers everything.
In practice, developers raising a wholesale scheme choose between three pathways, each with a different cost and control trade-off:
Hold your own Australian Financial Services Licence (AFSL). This gives you the most control and is the right long-term answer if capital raising is going to be a core, repeated part of your business. The cost is a months-long application, ongoing competence and financial-resource requirements, and standing compliance obligations.
Act as a corporate authorised representative of an existing licensee for the services you can validly provide that way, while making sure the entity that actually issues the interests is properly licensed given ASIC’s principal-versus-agent position. This needs careful legal structuring to work.
Engage a licensed trustee or fund administrator who holds the relevant Australian Financial Services Licence (AFSL) and acts as trustee or operator of your scheme, with you as manager or investment adviser. The specialist carries the licence and much of the compliance load, you focus on the deal, and you pay a fee. For a first scheme, or occasional schemes, this is the route many first-time sponsors take. The trade-offs are cost and shared control. The property syndicates guide works through these pathways in more detail from the raise side.
Whichever path you pick, decide it before you market the deal. Retro-fitting a licence after you have already issued interests is not a fix.
What it costs, and how it hits your feasibility
Setting up and running a scheme adds both hard costs and a higher cost of capital, and both belong in the feasibility before you commit, not after. The hard costs vary widely with structure, jurisdiction and how much you outsource, so treat any figure as indicative and get fixed quotes for your specific structure. As a rough shape, legal and structuring for a wholesale unregistered scheme, an Information Memorandum, and the trust and trustee arrangements can typically run from the low tens of thousands of dollars into six figures depending on complexity, before any responsible-entity or registration cost if a retail scheme is unavoidable. Engaging a licensed trustee adds an establishment fee plus ongoing fees, often charged on funds under management or as a fixed annual amount.
The larger effect is usually the cost of the capital itself. Pooled investor equity is not free money. Investors expect a return that reflects development risk, and they often expect a preferred return before you share in the upside. That preferred return, and any promote or performance split, sits in your capital stack and changes the hurdle the project has to clear. The way those returns are structured, and the order in which capital and profit flow back, is set out in the guide on profit distribution and the equity waterfall, and the way pooled equity sits alongside senior and mezzanine debt is covered in the capital stack guide.
This is where modelling earns its keep. In Feasly, you can build the funding stack with senior debt, mezzanine, and preferred and ordinary equity, apply capitalised interest, and see how the pooled investor equity changes the residual land value the deal can justify and the return on cost left for the developer. Because you can compare scenarios side by side, you can test a wholesale-only raise against a structure that carries the heavier retail compliance, and see what each does to the margin before you decide which is worth the cost. The platform models the numbers. It does not tell you whether your structure is a managed investment scheme (MIS) or handle the legal compliance, which is what your lawyer and licensed trustee are for.
Does the state I build in change any of this?
No. The managed investment scheme (MIS) regime is federal. It lives in the Corporations Act 2001 (Cth) and is administered by ASIC, so the definition, the registration triggers, the wholesale tests and the licensing rules are the same whether you build in New South Wales, Victoria, Queensland, South Australia, Western Australia, Tasmania, the Australian Capital Territory or the Northern Territory. You do not need eight versions of the scheme analysis.
What does vary by state is the tax and duty that sits on the scheme’s underlying assets, not the scheme regime itself. Where investors acquire or change interests in a land-rich unit trust, landholder duty can apply in each state and territory on its own thresholds and rates, and land tax on the held asset differs state by state, both assessed by the relevant state revenue office rather than by ASIC. The income and capital-gains treatment of what the scheme earns, and how it flows through a trust to members, is federal and is covered in the guides on income tax on development profit and capital gains tax for developers. The short version: analyse the scheme once at the federal level, then check the state duty and land tax position of the assets it holds.
New Zealand: the same trap, a different Act
New Zealand developers face the same basic problem under a different statute. Pooling investors’ money into a development can be a managed investment scheme under the Financial Markets Conduct Act 2013, regulated by the Financial Markets Authority (FMA) rather than ASIC. A retail managed investment scheme in New Zealand generally needs a licensed manager and an independent supervisor, plus a product disclosure statement and registration on the Disclose Register, which is a heavy load for a one-off developer raise.
As in Australia, the practical answer is usually to raise from wholesale investors and rely on an exclusion from the retail disclosure regime. The wholesale investor exclusions sit in Schedule 1 of the Financial Markets Conduct Act 2013, and include categories such as investment businesses, large investors, and “eligible investors” who self-certify their experience with the certification confirmed by an accountant, lawyer or financial adviser.
This is an area New Zealand developers should watch closely right now, because the Financial Markets Authority (FMA) has been active in the property space. In 2025 the regulator formally warned several wholesale property investment firms after finding non-compliant use of the wholesale exclusion, including offers reaching people with little genuine investment experience. It also took the eligible-investor certificate question to the High Court and has published the resulting guidance on how the wholesale investor rules apply. For a New Zealand developer, the message is the same as in Australia: getting an investor’s wholesale status wrong is not a paperwork slip, it can expose the whole raise, so hold the right certification before you accept the money.
What about overseas investors or a foreign scheme?
Two cross-border points are worth flagging, though most single-project raises will not hit them. First, if you take capital from foreign persons into a structure that holds Australian land, the foreign investment rules administered by the Foreign Investment Review Board (FIRB) can apply to the underlying acquisition, which is a separate approval regime from the scheme rules and is easy to overlook when the money arrives through a pooled vehicle. Second, if you want to bring an overseas scheme to Australian investors, ASIC’s Regulatory Guide 178 (Foreign collective investment schemes) sets out when the regulator may give relief from registration, licensing and disclosure for a foreign scheme. Both are specialist areas, and the point here is to spot them early, because they change the structuring at the outset rather than at the end.
Work it in this order: a practical decision path
Run the managed investment scheme (MIS) question as a short sequence before you accept a dollar, and you head off most of the expensive mistakes. In order:
First, ask whether the raise meets the three elements in section 9. If passive investors are pooling money and relying on your effort, assume it is a managed investment scheme (MIS) and get advice if you think it is not.
Second, decide whether you are raising wholesale-only. If yes, confirm the evidence for each investor’s wholesale status, the $500,000 parcel, a current accountant’s certificate, professional-investor status, or a documented sophisticated-investor assessment, and hold it before you issue the interest.
Third, confirm you fit a registration exemption. Wholesale-only issues generally keep the scheme unregistered under section 601ED(2). A small number of trusted retail investors may fit the 20/12/$2 million rule. Anything else points toward a registered scheme.
Fourth, sort the licence. Decide whether you will hold your own Australian Financial Services Licence (AFSL), act as an authorised representative with a properly licensed issuer, or engage a licensed trustee, and do it before you market the deal.
Fifth, put the cost of all of the above, including the preferred return on investor equity, into the feasibility, so the deal you are raising for is the deal after the compliance and the cost of capital, not before.
None of this is legal advice, and every raise sits in its own facts, so treat the sequence as a way to organise the conversation with your lawyer and licensed trustee, not a substitute for it.
Reform watch: thresholds and tests that may move
The wholesale-client thresholds have not changed since 2001, and while nothing has been legislated, a developer planning a multi-year pipeline should not assume they stay fixed forever. Because the $2.5 million net-assets and $250,000 income figures have never been indexed, the share of the adult population that qualifies as wholesale has grown steadily, which has kept the tests under review. The Parliamentary Joint Committee on Corporations and Financial Services reported in February 2025 and recommended no immediate increase to the financial thresholds, while recommending that the subjective sophisticated-investor test be replaced with more objective criteria. Separately, Treasury has run a broader review of the regulatory framework for managed investment schemes, and ASIC has publicly supported lifting the thresholds in line with inflation. The practical point to raise with your lawyer: whether your structuring still works if the sophisticated-investor test tightens or the wealth thresholds rise, rather than relying on the current settings holding.
If you take one thing from this guide, make it this: the moment you pool passive investors’ money to fund a development, assume you are running a managed investment scheme (MIS), settle the wholesale-or-retail question first, and price the compliance and the cost of capital into the feasibility before you accept a cent. The developers who treat that as the starting point, rather than a problem to sort out later, are the ones whose second raise is easier than their first.
This guide is general information for property developers, not legal, financial or tax advice. The managed investment scheme (MIS) rules carry real personal and corporate liability, and every raise turns on its own facts, so confirm your position with a qualified lawyer and, where relevant, a licensed trustee before you act.