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June 19, 2013

Regulation reviews to help tech start-ups

The Government has announced two reviews designed to assist tech start-ups.

The Government will undertake consultation on Australian crowd-sourced equity funding (CSEF), which will consider whether Australia’s corporations law properly regulates and facilitates CSEF.

This follows ASIC's guidance published last year to promoters of crowd fundraising.

Treasury has separately announced a review into employee share schemes to help address the barriers faced by start-up companies in attracting and retaining staff.

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Posted 19th June 2013 by David Jacobson in Corporations Act, Funds, Web/Tech, Workplace

May 21, 2013

ASIC reviews charitable investment fundraisers

ASIC has released Consultation Paper 207 Charitable investment fundraisers (CP 207) proposing reforms for charities (including religious charitable development funds (RCDFs)) that raise investment funds.

The proposals do not affect fundraising by charities in the form of donations.

The Consultation Paper proposes to either:

  • remove existing exemptions available to charities that raise investment funds under Regulatory Guide 87 Charities (RG 87) from 28 June 2014 (Option A), or
  • retain existing exemptions on the basis that they are only available to organisations that satisfy both existing and new conditions to the exemptions (Option B).

ASIC is proposing that in order to fundraise charities must hold 75% of their assets in assets that directly relate to their charitable purpose; and where the fund is offered to retail clients:

  • have an Australian financial services licence, and
  • meet minimum capital and liquidity requirements.

ASIC has chosen 28 June 2014 for Option A because it aligns with the date that APRA proposes in its discussion paper issued 19 April 2013 as the date from which amendments to current exemptions under the Banking Act for RCDFs would become effective.Background

The exemptions in Option B would only be of assistance to a debenture issuer if it obtained any exemption required from the Banking Act. APRA has proposed for discussion that from 28 June 2014 it will no longer give an exemption for RCDFs, a number of which are also charitable investment fundraisers, where the RCDF accepts retail investments.

ASIC proposes to roll over relief that is currently available to schools for school enrolment deposits without amending the terms of the relief.

If Option B is adopted the amendments to the existing exemptions will be phased in over several years and be subject to a transition period.

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Posted 21st May 2013 by David Jacobson in Charities, Corporations Act, Funds

January 15, 2013

Simple Corporate Bonds Bill

Treasury has released an exposure draft Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013.

Currently, the Corporations Act requires a corporation to prepare a full prospectus for the offer of corporate bonds to retail investors.

The reforms are intended to:
•introduce a streamlined two-part disclosure regime for offers of "simple corporate bonds" to retail investors;
•make changes to the civil liability provisions in respect to corporate bonds issued to retail investors; and
•clarify the application of the defences in respect to misleading and deceptive statements and omissions in disclosure documents relating to corporate bonds issued to retail investors.

To be classified as a simple corporate bond the offer must be for debt securities that satisfy specific conditions including:
• The securities must be debentures as defined in section 9 of the Corporations Act.
• The securities must be quoted on a prescribed financial market.
• The securities must be denominated in Australian currency.
• A minimum subscription amount of $50 million must be raised under the offer in respect to the securities.
• The principal investment amount and any accrued interest payable in respect of the must be repaid to the holder at the end of fixed term of the security.

The two-part prospectus will be structured in the following manner:
• Base: The base part would have a life of three years. The base prospectus would have general information about the issuer and the issue that is unlikely to change significantly over three years. Issuers would have the option of releasing a base prospectus in anticipation of making an actual offer of bonds. Issuers would not need to update the base document.
• Offer specific: For each fund raising tranche, issuers will need to release a second document outlining the key details of the offer, that being the offer specific prospectus. The offer specific prospectus would include a statement outlining that the issuer has complied with their continuous disclosure obligations. Issuers would need to disclose in the second part any matters material to a consideration of an investment in the bonds which have not already been the subject of continuous disclosure.

To ensure that the new two part prospectus regime is sufficiently streamlined, certain material (as prescribed in regulations) will be able to be incorporated by reference in both the base prospectus and the offer specific prospectus.

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Posted 15th January 2013 by David Jacobson in Corporations Act, Funds, Investments

February 15, 2012

ASIC good practice guide on advertising financial products and advice services

ASIC has released RG 234 Advertising financial products and advice services: Good practice guidance (RG 234) setting out its views on the obligations of financial service providers to not make false or misleading statements or engage in misleading or deceptive conduct under the Corporations Act and the ASIC Act.

Who it applies to
ASIC's guidance applies to:
• promoters of financial products and financial advice services. The promoter will sometimes be the product issuer, but can also be a third party such as a financial adviser, distributor or agent; and
• publishers of promotions about financial products and financial advice services.

Promoters who hold an AFS licence must comply with the ASIC Act to meet their obligation to comply with financial services laws: s912A(1)(c).

What products it applies to
ASIC's guidance applies to all types of financial products, including:
• investment products;
• risk products;
• non-cash payment facilities; and
• credit facilities.

Although references to ‘financial products’ in this guide mean financial products as defined in the Australian Securities and Investments Commission Act 2001 (ASIC Act) and therefore include credit facilities (see s12BAA, ASIC Act) the guide focuses primarily on advertising of investment and risk products and financial advice services. Different considerations apply for advertising of credit products and services, and ASIC plans to issue additional guidance for credit providers and credit service providers under the National Consumer Credit Protection Act 2009 (National Credit Act).

The good practice guidance also applies to advertising of both general and personal financial product advice. References to ‘financial advice services’ in the guide mean the provision of financial product advice as defined in the ASIC Act: see s12BAB(5).

What the guidance covers
The guidance covers:
• the nature of the product;
• returns, benefits and risks;
• warnings, disclaimers, qualifications and fine print;
• fees and costs;
• comparisons;
• past performance and forecasts;
• use of certain terms and phrases (e.g. ‘free’, ‘secure’ and ‘guaranteed’);
• the advertisement’s target audience;
• consistency with disclosure documents;
• photographs, diagrams, images and examples; and
• the nature and scope of advice.

What media it applies to
It applies to advertising communicated through any medium in any form, including:
(a) magazines and newspapers;
(b) radio and television;
(c) outdoor advertising, including billboards, signs at public venues, and transit advertising;
(d) the internet, including webpages, banner advertisements, video streaming (e.g. YouTube), and social networking and microblogging (e.g. Twitter);
(e) social media and internet discussion sites;
(f) product brochures and promotional fact sheets;
(g) direct mail (e.g. by post, facsimile or email);
(h) telemarketing activities and audio messages for telephone callers on hold; and
(i) presentations to groups of people, seminars and advertorials.

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Posted 15th February 2012 by David Jacobson in Compliance, Corporations Act, Financial Services, Funds, Insurance, Investments, Marketing, Superannuation

August 16, 2011

Assessing Environmental, Social and Governance (ESG) investment risks

The Australian Council of Superannuation Investors (ACSI) and the Financial Services Council (FSC) have published the ESG Reporting Guide for Australian Companies.

The Guide highlights the minimum information and reasonable data requirements that they recommend be provided for investment managers (represented by the FSC) and asset-owners (represented by ACSI) to successfully price, analyse and manage Environmental, Social and Governance (ESG) investment risks.

The Guide was created to provide a reporting guide for all Australian companies, with emphasis on those in the S&P/ASX 200.

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Posted 16th August 2011 by David Jacobson in Corporate Governance, Funds, Investments, Superannuation

April 14, 2011

Prospectus disclosure guide

ASIC has released Consultation Paper 155 [CP 155] Prospectus disclosure: Improving disclosure for retail investors, and an accompanying draft regulatory guide.

The purpose of the regulatory guide is to give issuers guidance on how to word and present prospectuses and other documents in a ‘clear, concise and effective’ manner as required by s715A CA and how to prepare prospectuses that satisfy the content requirement in s710 CA.

Comments may be made until 7 June 2011 and the final guide is due to be issued in December 2011.

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Posted 14th April 2011 by admin in Corporations Act, Funds