ASIC strengthens disclosure requirements for debentures and unsecured notes
The Australian Securities and Investment Commission (ASIC) has released updated requirements for unlisted debentures and unsecured notes to improve disclosure to retail investors.
New guidelines are set out in an updated version of Regulatory Guide (RG) 69 Debentures and unsecured notes — improving disclosure for retail investors.
From 1 July, 2011, the regulator will no longer permit some products to be called ‘debentures’, which means products that are not secured over tangible property will need to be called ‘unsecured notes’ or ‘unsecured deposit notes’.
This comes after concerns that some of the issuers that have failed over the past two years have incorrectly described their products as debentures — implying their products had a greater level of security than was actually the case.
The updated version of RG 69 sets out adjustments to the eight benchmarks that issuers should disclose on an ‘if not, why not?’ basis from 1 September, including those relating to minimum amounts of equity capital.
The new guide also contains plain-English explanations that issuers should provide in their prospectuses from 1 September about the importance of their benchmark disclosures.
ASIC has also made consequential amendments to RG 156 Debenture and unsecured note advertising, and will soon release updated versions of the investor guide regarding unlisted debentures and unsecured notes and the Pro Forma 223 Interim auditor’s benchmark report.
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