media release

IR 08-23 ASIC further clarifies guidance for unlisted and unrated debentures

Published

ASIC today released the updated Regulatory Guide 69: Debentures–improving disclosure for retail investors.

The guide clarifies existing obligations to make them simpler for issuers to implement but does not change ASIC’s policy on improved disclosure for retail investors.

The original guide, released on 31 October 2007, set out a series of benchmarks which debenture issuers should disclose against on an ‘if not, why not’ basis. The benchmarks are designed to ensure the risks associated with debentures are better disclosed to retail investors.

Since the guide was released, ASIC has been working with debenture issuers, trustees, and auditors to ensure that the benchmarks, disclosure, and auditor obligations are understood.

As a result of this feedback, ASIC has refined some aspects of the practical implementation in the regulatory guide by clarifying:

  • the disclosure benchmarks for: equity capital, liquidity, loan portfolio, valuations, and lending principles;

  • the disclosure obligations for issuers who on-lend funds indirectly through a related party;

  • that the guide does not apply to debentures that are to be quoted on a financial market, or to debentures that are convertible into listed securities at the discretion of the investors; and

  • the auditors’ report on the benchmarks.

When auditing the annual financial report of the issuer, ASIC expects issuers to engage their auditors to provide a separate report in relation to the benchmarks. A pro forma ‘auditor’s benchmark report’ is available at ASIC’s website http://www.asic.gov.au/uud to meet this requirement.

ASIC has been monitoring debenture issuers to check that this benchmarking information is adequately disclosed to investors on an ‘if not, why not’ basis.

ASIC intends to continue working with debenture issuers, trustees, auditors, and valuers to ensure retail investors are better informed when making choices about their investments and assessing the risk of capital return.

Read the April announcement (08-82 ASIC acts to provide retail investors with better disclosure in unlisted unrated debentures).

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