ASIC has released a policy statement regarding disclosure in reconstructions or capital reductions involving an issue of securities.

Titled, Disclosure in reconstructions [PS 188], the statement confirms invitations to vote on an issue of securities constitute an ‘offer’ for the purposes of the prospectus provisions of the Corporations Act. This means a prospectus must accompany the notice of meeting.

‘Reconstructions’ are not formal schemes of arrangement under Pt 5.1 of the Act, but bear similarities to them. A foreign scheme of arrangement or a trust scheme is a reconstruction.

Policy Statement 188 discusses prospectus relief for offers of securities under schemes of arrangement in certain foreign jurisdictions. This relief is similar to the prospectus exemption for Australian schemes of arrangement under s708(17) of the Act. The policy also sets out the circumstances in which ASIC may grant case-by-case prospectus relief for other reconstructions and capital reductions. An example is relief for a reconstruction where there is no change to the underlying business or assets of the company.

Policy Statement 188 also provides the following relief:

• various technical relief for prospectuses that accompany a notice of meeting;
• relief from the unsolicited offers provisions for reconstructions, including foreign schemes in certain jurisdictions; and
• PDS relief for Pt 5.1 schemes and foreign schemes in certain jurisdictions.

‘This policy statement clarifies when an offeror must include a prospectus with a notice of meeting and promotes informed decision-making by members on votes to issue securities. It also aligns the position for prospectuses and PDSs in reconstructions’, ASIC’s Assistant Director, Regulatory Policy, Mr Andrew Fawcett, said.

Today’s release of PS 188 follows public consultation on the policy proposal paper - Disclosure in Reconstructions.

Licensing relief for foreign schemes

ASIC has also granted licensing relief for schemes of arrangement in certain foreign jurisdictions by adding foreign scheme documents to its list of exempt documents in Class OrderFinancial product advice – exempt documents[CO 03/606]. Entities sending these documents to Australian residents do not need an Australian financial services licence for general product advice contained in them.

End of release

Download:

• Policy Statement [PS 188]
• regulation impact statement for this policy statement