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Tips & Traps: Key Person Conditions
ASIC imposes a ‘Key Person Condition’ where there is only one Responsible Manager (previously known as a Responsible Officer) or where ASIC has concerns about the organisational competency (skills and experience) of the other Responsible Managers.
Key Person Conditions were imposed quite regularly during the Australian Financial Services Licensing transition period when ASIC was considering a lot of applications and didn't have specific or detailed information about the experience and expertise of each Responsible Manager. They are not imposed as frequently now.
The ‘Key Person Condition’ requires the licensee to notify ASIC if the Key Person leaves their employment or is unable to act as an Responsible Manager for any length of time. Usually this is where the Responsible Manager is sick for a protracted period, retires, resigns or has their employment terminated for other reasons. You must notify ASIC within 5 business days of their departure or inability to act. At that time ASIC might ask who will replace them and take action if they feel the business can't operate without the Key Person.
To have the condition removed - apply to ASIC for a licence variation using formFS03 available on the ASIC website. Before applying, make sure that there are enough other appropriately qualified Responsible Managers to justify ASIC removing the condition. ASIC is likely to ask you to supply some information in support of the application - for example a table of organisational expertise or other documents that prove the other Responsible Managers in your business can "fill the void" if the Key Person is not there.
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