ASIC published Report 521 Further review of emerging market issuers (REP 521) today, which discusses ASIC’s views on emerging market issuer activity and highlights how ASIC has responded to the key challenges identified in Report 368, some of which we continue to see in our market.
Report 521 describes some of the regulatory initiatives that we have undertaken to address topical issues in our markets, which have also had an impact on our oversight of emerging market issuers. Using our regulatory tool kit, we have sought to provide greater transparency around the risks associated with emerging market issuers in a multi-faceted way, through engagement with industry and stakeholders, surveillance, enforcement action, guidance, education and policy advice.
The report reminds issuers and gatekeepers of the importance of their obligation and responsibility to comply with the Australian regulatory regime when raising capital in our markets.
ASIC will continue to consider the risks associated with emerging market issuers through our day-to-day responsibilities.
Background
Listed entities with a strong connection to one or more emerging markets have been common in our capital markets for some time. These connections can sometimes present challenges for our markets which could have an adverse impact on investor confidence. To ensure that the reputation of our markets is maintained, we have continued to monitor activity by emerging market issuers.
Over 2012–13, ASIC conducted a review of emerging market issuers to consider the impact of such entities on our markets’ overall integrity. The outcome of our review was published in Report 368 Emerging market issuers (REP 368).
ASIC identified a number of challenges that emerging market issuers may be more likely to encounter than entities operating wholly in Australia. As a result, ASIC’s Report 368 urges emerging market issuers and their advisers to focus on their corporate governance obligations and the disclosure that they provide to Australian investors regarding these challenges. We also warned investors to consider the risks before investing in emerging market issuers as they may not have the same protections when investing in an emerging market issuer that is listed in Australia but incorporated abroad.