Shielding syndicators: Why PI Insurance is your best bet

Shielding syndicators: Why PI Insurance is your best bet

Australia has 140,000 racehorse owners (excluding micro shares), greatly surpassing the number of any other nation.¹ As the global leader in horse syndication, with 1 in every 191 Australians owning a share in a racehorse, Australia’s market continues to expand with no signs of easing.² A key reason for this is that Australia’s yearling market works to support and facilitate syndication. It enables syndicators to take on the initial risk of purchasing yearlings before offering ownership shares, an approach that’s far less common in international markets. It makes horse ownership much more accessible for a great number of people. 

Despite its many accolades, shared ownership comes with an increased complexity for syndicators. The syndication market in Australia remains very competitive and is subject to strict regulations. Therefore, the importance of risk management and regulatory compliance cannot be overstated. PI insurance for syndicates has moved from a periphery concern to an AFSL requirement.  

Covering your tracks: why PI is essential for syndicators  

Horse syndication is governed by a dual regulatory framework involving both ASIC (Australian Securities and Investments Commission) and state-based racing authorities. Generally, a horse racing syndicate is classed and managed as a managed investment scheme under section 9 of the Corporations Act 2001.³  ASIC’s Regulatory Guide 91 stipulates that it’s a mandatory requirement for syndicators to hold an AFSL license. All AFSL license holders must have PI insurance. Aside from PI insurance being an obligatory compliance requirement, it provides reputational protection, investor confidence, and operational resilience. This covers threats in the ever-evolving risk landscape such as misrepresentation, poor advice and disputes over ownership or costs. Without this, syndicates face detrimental legal and financial fallouts. 

What is PI insurance?

PI (Professional Indemnity) insurance, in very generalised terms, protects professionals if they make a mistake in their work, that causes a client to lose money. It covers the financial losses and legal fallouts incurred by claims of negligence, errors, or omissions against a professional. 
Beyond financial protection, PI insurance is both a strategic safeguard and a regulatory requirement. It helps maintain trust with investors, ensures compliance with industry standards, and supports business continuity in the face of disputes or legal action. In a sector where transparency and accountability are crucial, having the right PI insurance indicates professionalism and a strong commitment to syndicate management. 

A PI policy typically covers:

• Breach of fiduciary duties – wrongful disbursement of funds to investors of a syndicate  
• Complaints to the Australian Financial Complaints Authority (AFCA)
• Regulatory investigations by ASIC – e.g. failure to properly and correctly identify an asset (Horse)
• Allegations of misleading and deceptive conduct – particularly regarding representations made in Product Disclosure Statements or Information Memoranda
• Compensatory damages – arising from insufficient, inadequate or inappropriate advice provided to investors
• Compensatory damages – due to misleading or incorrect information about the risks of an investment product, how the investment operates or the underlying asset(s) or product

More than just a share: understanding horse syndicates

Horse racing syndication is the process of splitting ownership of a racehorse into smaller shares among multiple parties. These can be private or public. Private syndicates are limited to 20 people or less and are generally exempt from ASIC’s managed investment scheme rules, provided they don’t publicly promote or sell shares.⁴ Conversely, public syndicates can include more than 20 members and are considered a Managed Investment Scheme (MIS) under the Corporations Act 2001 and must comply with ASIC regulations. 

Most often, shares are divided into 5% or 10% shares, though 2.5% is becoming more common. When the horse wins or places in a race, the winnings are divided relative to the percentage owned by each person. Though it’s not just the winnings that are divided in horse ownership, so are the costs, which can be excessive and expensive. The burden of breaking in and education, pre-training and training, vet inspections and insurance, are shared among the syndicate. 
 

Syndicators (also known as managing owners) play a central role in the formation and management of a horse syndicate, from acquiring the horse, to managing the communication with owners and ensuring compliance with regulations. 

Racing in shares: inside Australia’s thriving syndication market

Horse syndication has transformed the way Australians engage with thoroughbred racing, opening the gates to ownership to thousands of everyday fans. With over 11,000 registered syndicates and more than 140,000 individual owners (excluding micro shares), Australia is a long way ahead in shared racehorse ownership. Syndicates, that range from boutique partnerships to large-scale public offerings, have made the sport more accessible, social, and financially viable for the Australian population. The rise of micro-share platforms has been instrumental to this, like MyRacehorse and miRunners, broadening participation and allowing people to own extremely small fractions of a horse (as little as $100). 

The syndication market has grown into one of professionalism, expert management, and transparent communication. With that, an increasing commercialisation and regulatory sophistication of syndication has followed. Syndicators should act now to protect both the financial strength and long-term reputation of their racing investment.

¹"Why Australia Does Syndication Best – and How David Ellis Leads the Charge," TTR AusNZ, 4 February 2025, https://www.ttrausnz.com.au/edition/2025-02-04/why-australia-does-syndication-best-and-how-david-ellis-leads-the-charge [accessed 15 July 2025].
² ‘’Why Australia Does Syndication Best – and How David Ellis Leads the Charge," TTR AusNZ, 4 February 2025, https://www.ttrausnz.com.au/edition/2025-02-04/why-australia-does-syndication-best-and-how-david-ellis-leads-the-charge [accessed 15 July 2025].
³ Pure Equine, Buying a Racehorse: Syndicates, Pure Equine, https://www.pureequine.com.au/blog/buying-a-racehorse-syndicates [accessed 16 July 2025].
⁴ Greyhound Welfare & Integrity Commission, NSW Syndicates Fact Sheet, September 2024, https://www.gwic.nsw.gov.au/sites/default/files/2024-09/Syndicates-fact-sheet.pdf [accessed 15 July 2025]
⁵ Snapshot: Regulation of Horse Breeding Schemes and Horse Racing Syndicates in Australia," Australian Sports Law Blog, https://www.aussportslaw.com.au/post/snapshot-regulation-of-horse-breeding-schemes-and-horse-racing-syndicates-in-australia [accessed 15 July 2025].